Annuity payments are assumed to come at the end of each payment period (termed a

Question

Annuity payments are assumed to come at the end of each payment period (termed an ordinary annuity) However, an exception oocurs when the annuity payments come at the beginning of each period (termed an annuity due). what is the tture value of a 12-year annuity of $2.700 to n and subtract 1 from the tabular value. For example, to find the future value of a $100 per period where payments come at the beginning of each period? The interest rate is 8 peroent. Use Aapend peyment at the beginning of each period for five periods at to percent, go to Appendx C for n- and i=10peroent Look up the value of 7.716 and subtract 1rom itfor an answer of 6.716 or$671.60($100 , 6.716)(Do not round intermediate answer to 2 decimall places ns. Round your final

Explanation / Answer

Computation of Future Value of Annuity Due

Future Value of Annuity Due = Annual Payment * (FVAD (8%, 13) - 1)

Future Value of Annuity Due = 2700 * (21.495 - 1)

Future Value of Annuity Due = $55336.50

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