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    selmamarla3's Avatar
    selmamarla3 Posts: 6, Reputation: 1
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    #1

    Mar 21, 2008, 07:06 AM
    Future Value: Annuity versus annuity due
    What's the future value of a 7 percent, 5 year ordinary annuity that pays $300 each year? If this were annuity due, what would its future value Be?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Mar 23, 2008, 03:00 PM


    Where i = interest per compounding period, and n = total number of compounding periods.
    Since yours is annual, i just equals the yearly interest rate and n equals the years.

    That is the equation, but I don't know how you need to solve it. This can be done with charts, financial calculators and Excel.

    I don't remember the adjustment for an annuity due cause I never do them. I think you add one to n, and then subtract one payment from the final answer. If I have time, I'll try to look that up if someone doesn't beat me to it.
    victoriaber's Avatar
    victoriaber Posts: 1, Reputation: 1
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    #3

    Mar 13, 2012, 05:18 AM

    = 300[((1 + 0.07)5-1)/0.07]
    = 1725.22
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