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    spicy cinnamon's Avatar
    spicy cinnamon Posts: 2, Reputation: 1
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    #1

    Mar 8, 2009, 05:18 PM
    Future Value: annuity versus annuity due
    What's the future value of a 7 percent, 5 year ordinary annuity that pays $300.00 each year? If this were an annuity due, what would its future value be?

    I am using a financial calculator and is having problems arriving at the correct answer. I tried the examples in the book; however my answer does not match, I cannot set the beginning and ending mode accuratly. Thanks for your help.
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #2

    Mar 8, 2009, 05:55 PM

    It would be $ 1,845.99

    SEE SCHEDULE:-

    YEAR
    1 300.00 321.00
    2 621.00 664.47
    3 964.47 1,031.98
    4 1,331.98 1,425.22
    5 1,725.22 1,845.99
    Dmitrii's Avatar
    Dmitrii Posts: 4, Reputation: 1
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    #3

    Jun 28, 2009, 11:44 AM
    FVA due=FVA*(1+r)
    FVA=300*((1.07^5-1)/0.07)=1725.22
    FVA due=1725.22*1.07=1845.99
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