A Find the future value of the ordinary annuity Round your a

A)

Find the future value of the ordinary annuity. (Round your answer to the nearest cent.)

$115 monthly payment, 5.5% interest, 1 year

= $

B)

Find the future value (FV) of the annuity due. (Round your answer to the nearest cent.)

$165 monthly payment, 6.25% interest, 14 years

= $

Solution

A) Given:

$115 monthly payment, 5.5% interest, 1 year

The future value of the ordinary annuity is=

P = PMT [((1 + r)ⁿ - 1) / r]

Where:

P = The future value of the annuity stream to be paid in the future

PMT = The amount of each annuity payment

r = The interest rate

n = The number of periods over which payments are made

P = $115 [((1 + 5.5)¹² - 1) / 5.5]

P=$1900.

B)Given:

$165 monthly payment, 6.25% interest, 14 years

  FV=[ PMT/[er1] ] [e^rt1]e^r

^=$773.