Problem 5-8 Calculating Annuity Values [LO 1] For each of the following annuitie
ID: 2615251 • Letter: P
Question
Problem 5-8 Calculating Annuity Values [LO 1]
For each of the following annuities, calculate the future value. (Enter rounded answers as directed,
but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
Future Value
Annual Payment
Interest Rate
Years
$
$
1,500
8
%
10
$
5,000
9
40
$
3,200
6
9
$
7,500
10
30
References
eBook & Resources
For each of the following annuities, calculate the future value. (Enter rounded answers as directed,
but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
Explanation / Answer
Future Value
Annual Payment
Interest Rate
Years
$ 21729.84
$
1,500
8
%
10
$1689412
5,000
9
40
$36772.21
3,200
6
9
$1233705
7,500
10
30
FV = PV * [(1 + r)N - 1 ] / r
1) FV = 1500 * [(1+0.08)10 - 1] / 0.08 = 21729.84
2) FV = 5000 * [(1+0.09)40 -1] / 0.09 = 1689412
3) FV = 3200 * [(1+0.06)9 - 1 ] / 0.06 = 36772.21
4) FV = 7500 * [(1+0.10)30 -1]/ 0.10 = 1233705
Future Value
Annual Payment
Interest Rate
Years
$ 21729.84
$
1,500
8
%
10
$1689412
5,000
9
%40
$36772.21
3,200
6
%9
$1233705
7,500
10
%30