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29 July, 09:03

What's the future value of a 12%, 5-year ordinary annuity that pays $800 each year? Round your answer to the nearest cent. $ If this was an annuity due, what would its future value be? Round your answer to the nearest cent. $

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  1. 29 July, 11:13
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    The Future value of annuity due of $800 per year at 12% for 5 years is $5,692.15

    Explanation:

    Annuity payment = P = $800 per year

    Number of years = n = 5 years

    Interest rate = r = 12% = 0.12

    Use following formula to calulate the Future value of Annuity due.

    Future value of annuity = (1+r) x P [ ((1+r) ^n - 1) / r]

    Future value of annuity = (1+0.12) x 800 [ ((1+0.12) ^5 - 1) / 0.12]

    Future value of annuity = $5,692.15

    So, The Future value of annuity due of $800 per year at 12% for 5 years is $5,692.15
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