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Home > Business & Careers > Finance   »   Future Value: annuity versus annuity due

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Old Mar 8, 2009, 05:18 PM
spicy cinnamon
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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.

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Old Mar 8, 2009, 05:55 PM   #2  
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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
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Old Jun 28, 2009, 11:44 AM   #3  
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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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