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-   -   Future Value: annuity versus annuity due (https://www.askmehelpdesk.com/showthread.php?t=326613)

  • Mar 8, 2009, 05:18 PM
    spicy cinnamon
    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.
  • Mar 8, 2009, 05:55 PM
    ROLCAM

    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
  • Jun 28, 2009, 11:44 AM
    Dmitrii
    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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