Week 6 Numerical Examples for Annuities

Week 6: Lecture

Numerical Examples for Annuities

 

Future Value Annuity Question
What is the future value of ten annual payments of $100 each invested at the end of each of the next ten years at 5% interest. Answer using the algebraic version of the FVa equation:

tvm_future_value_annuity_100_10_pmt.jpg


Answer using the interest factor version of the FVa equation. This is from Table A.3 on page 236 in your McGraw-Hill Create text:

tvm_future_value_annuity_interestfactor_100_10_pmt.jpg

 

Present Value Annuity Question
What is the present value of a series of ten annual payments of $100 each to be received at the end of each of the next ten years if your required rate of return is 5%? Answer using the algebraic version of the PVa equation:

tvm_present_value_annuity_100_10_pmt.jpg


Answer using the interest factor version of the PVa equation. This is from Table A.4 on page 237 in your McGraw-Hill Create text:

tvm_present_value_annuity_interestfactor_100_10_pmt.jpg