$5,000 received each year for 5 years on the last day of each year if your inves
ID: 2814723 • Letter: #
Question
$5,000 received each year for 5 years on the last day of each year if your investments pay 6 percent compounded annually. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
$5,000 received each quarter for 5 years on the last day of each quarter if your investments pay 6 percent compounded quarterly. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
$5,000 received each year for 5 years on the first day of each year if your investments pay 6 percent compounded annually. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
$5,000 received each quarter for 5 years on the first day of each quarter if your investments pay 6 percent compounded quarterly. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Calculate the future value of the following annuity streams:Explanation / Answer
a)
Future value = Annuity * [ ( 1 + r)n - 1] / r
Future value = 5000 * [( 1 + 0.06)5 - 1] / 0.06
Future value = 5000 * 5.637093
Future value = $28,185.46
b)
Rate = 0.06 / 4 = 0.015 or 1.5%
Periods = 5 * 4 = 20
Future value = Annuity * [ ( 1 + r)n - 1] / r
Future value = 5000 * [( 1 + 0.015)20 - 1] / 0.015
Future value = 5000 * 23.123667
Future value = $115,618.34
c)
Future value of annuity due = ( 1 + r) * Annuity * [ ( 1 + r)n - 1] / r
Future value of annuity due = ( 1 + 0.06) * 5000 * [( 1 + 0.06)5 - 1] / 0.06
Future value of annuity due = 1.06 * 5000 * 5.637093
Future value of annuity due = 1.06 * 28,185.46
Future value of annuity due = $29,876.59
d)
Rate = 0.06 / 4 = 0.015 or 1.5%
Periods = 5 * 4 = 20
Future value of annuity due = ( 1 + r) * Annuity * [ ( 1 + r)n - 1] / r
Future value of annuity due = ( 1 + 0.015) * 5000 * [( 1 + 0.015)20 - 1] / 0.015
Future value of annuity due = ( 1.015) * 5000 * 23.123667
Future value of annuity due = ( 1.015) * 115,618.34
Future value of annuity due = $117,352.61
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