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What is the future value of a 5-year annuity due that promises to pay you 300 each year The interest rate is 7 percent?
Wiki User
∙ 16y ago
(F/A,i,n); F=?, A=300, i=7%, n=5
F={A[(1+i)n -1]}/ i
F={300[(1+0.07)5-1]}/0.07
F=1725.2
where F- future value
A-Annuity
i-interest
n-period of payment
Wiki User
∙ 16y ago
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What is the future value on an ordinary annuity of 12000 dollars per year for three years at 9 percent interest compounded annually?
39,337.20
What is the difference between ordinary annuity and annuity due?
In an ordinary annuity, the payments are fed into the investment at the END of the year. In an annuity due, the payments are made at the BEGINNING of the year. Therefore, with an annuity due, each annuity payment accumulates an extra year of interest. This means that the future value of an annuity due is always greater than the future value of an ordinary annuity.When computing present value, each payment in an annuity due is discounted for one less year (because one of the payments is not made in the future- it is made at the beginning of this year and is already in terms of present dollars). This will result in a larger present value for an annuity due than for an ordinary annuity, as well.
What is the Difference between the future value of annuity and sinking fund?
future value of an annuity is a reciprocal of a sinking fund
Differentiate between ordinary annuity and annuity due?
In an ordinary annuity, the annuity payments are fed into the investment at the END of the year. In an annuity due, the payments are made at the BEGINNING of the year. Therefore, with an annuity due, each annuity payment accumulates an extra year of interest. This means that the future value of an annuity due is always greater than the future value of an ordinary annuity.When computing present value, each payment in an annuity due is discounted for one less year (because one of the payments is not made in the future- it is made at the beginning of this year and is already in terms of present dollars). This will result in a larger present value for an annuity due than for an ordinary annuity, as well.
What is the future value of a 5year ordinary annuity with annual payments of 200 evaluated at 15 percent?
Fv = $200(fvifa15%,5) = $200(6.7424) = $1,348.48.
What is the future value on an ordinary annuity of 12000 dollars per year for three years at 9 percent interest compounded annually?
39,337.20
What is FVIFA useful for?
Future value interest factor annuity
Determine the future value of an annuity into which quarterly deposits of 450 are made for 9 years if the annuity pays 10 percent compounded quarterly?
138645
What happens to the present value of an annuity when the interest rate raises?
decreases towards the future value faster
What is the difference between ordinary annuity and annuity due?
In an ordinary annuity, the payments are fed into the investment at the END of the year. In an annuity due, the payments are made at the BEGINNING of the year. Therefore, with an annuity due, each annuity payment accumulates an extra year of interest. This means that the future value of an annuity due is always greater than the future value of an ordinary annuity.When computing present value, each payment in an annuity due is discounted for one less year (because one of the payments is not made in the future- it is made at the beginning of this year and is already in terms of present dollars). This will result in a larger present value for an annuity due than for an ordinary annuity, as well.
What would happen to the future value of an annuity if interest rates fell in later period's?
Your annuity will decrease in value as your interest earned would decrease, which would just continue to snowball because that would make your principal value less even further down the road, causing your annuity to devalue even more.
What is the future value of 1200 a year for 40 years at 8 percent interest?
What is the future value of $1,200 a year for 40 years at 8 percent interest? Assume annual compounding.
What is the Difference between the future value of annuity and sinking fund?
future value of an annuity is a reciprocal of a sinking fund
Differentiate between ordinary annuity and annuity due?
In an ordinary annuity, the annuity payments are fed into the investment at the END of the year. In an annuity due, the payments are made at the BEGINNING of the year. Therefore, with an annuity due, each annuity payment accumulates an extra year of interest. This means that the future value of an annuity due is always greater than the future value of an ordinary annuity.When computing present value, each payment in an annuity due is discounted for one less year (because one of the payments is not made in the future- it is made at the beginning of this year and is already in terms of present dollars). This will result in a larger present value for an annuity due than for an ordinary annuity, as well.
What happens to the present value of an annuity if the future value of an annuity is increased?
It increases
When do you use fvif and fvifa?
An Annuity is a series of payments of a fixed amount for a specified number of equal length periods When the FV of an annuity is known, and you need to calculate the value of each payment, or the FVIFA, then: FVIFA = Future Value Interest Factor Annuity FVIFA = ((1 + r)t -1)/r FVA = Future Value of an Annuity FVA = PMT x (FVIFA r, t) * where: PMT = Regular payments r = discount rate - (interest rate of your choosing) t = number of periods (time) of annuity - (number of years for example) When the PV of an annuity is already known, and you need to calculate the value of each payment, or the PVIFA, then: PVIFA = Present Value Interest Factor Annuity PVIFA = ((1/r) - 1/r(1+r)t ) PVA = Present Value of an Annuity PVA = PMT x (PVIFA r, t) * where: PMT = Regular payments r = discount rate - (interest rate of your choosing) t = number of periods (time) of annuity - (number of years for example)
The future value of an annuity due is always greater than the future value of an otherwise identical ordinary annuity True or false?
true
