Number of Annual Payments or Years Interest Rate Present Value Annuity Future Value 6. 10% $183.67 19 15% $1,423.38 $626.79 25 2% 0. 300 0.7% $482.05 Drint Dono
Number of Annual Payments or Years Interest Rate Present Value Annuity Future Value 6. 10% $183.67 19 15% $1,423.38 $626.79 25 2% 0. 300 0.7% $482.05 Drint Dono
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
What is the future value ?
Transcribed Image Text:### Data Table Overview
The table presents financial data related to annuities with variables such as interest rates and payment periods.
- **Columns:**
1. **Number of Payments or Years**: Represents the total number of payments or the time period in years.
2. **Annual Interest Rate**: The yearly interest rate expressed as a percentage.
3. **Present Value**: The current value of the annuity, here noted as zero for all entries.
4. **Annuity**: The regular payment amount.
5. **Future Value**: The value of the annuity in the future, indicated as unknown (?). Each of these values needs to be calculated.
- **Rows:**
1. **Row 1**: 6 payments at an interest rate of 10%, with an annuity of $183.67.
2. **Row 2**: 19 payments at an interest rate of 15%, with an annuity of $1,423.38.
3. **Row 3**: 25 payments at an interest rate of 2%, with an annuity of $626.79.
4. **Row 4**: 300 payments at an interest rate of 0.7%, with an annuity of $482.05.
Each row indicates that the future value needs to be calculated, based on the given annuity, interest rate, and number of payments or years.
Expert Solution
Step 1
An annuity is a contract between you and an insurance company in which you make a lump-sum payment or series of payments and, in return, receive regular disbursements, beginning either immediately or at some point in the future.
Where,
FVA= future value of annuity
A=annuity
R = rate
n = no of years
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