57 Future Value of an Ordinary Annuity 515 Semiannual and Ot

5-7: Future Value of an Ordinary Annuity 5-15: Semiannual and Other Compounding Periods Future value of an annuity Find the future values of the following ordinary annuties: a. FV of $700 paid each 6 months for 5 years at a nominal rate of 14% compounded semiannua. Round your answer to the nearest cent b. FV of $350 paid each 3 months for 5 years at a nominal rate of 14% compounded quartet, Round your answer to the nearest cent

Solution

a. PV = 0, PMT = 700, N = 10, rate = 7%

use FV function in Excel

FV = 9,671.51

b. PV = 0, PMT = 350, N = 20, rate = 3.5%

future value = 9,897.89

2.

a. PMT = -400, FV = 0, rate = 1%, N = 48

use PV function in Excel and add 4000

max amount = 19,189.58

b.

PMT = -400, FV = 0, rate = 1%, N = 60

use PV function in Excel and add 4000

max amount = 21,982.02