Explanation Ordinary annuity is a series of equivalent payments made at the completion of successive periods over a fixed amount of time. Compounding periods are the intervals during which payments are made. The formula to compute the future value of ordinary annuity is, F V = P m t × ( 1 + i ) n − 1 i Where, FV is the future value, Pmt is the Annuity payment, i is the interest rate per period, n is the number of periods. For example: Consider that monthly deposit at the end of each month is $ 150 , frequency of payment is 1 month, time duration is 4 years, nominal rate of return is 3 % and interest is compounded monthly. The rate period is 0.25 % ( 3 % ÷ 12 period per year ) . The number of periods is 48 ( 4 years × 12 period per year ) . Substitute 48 for number of periods, 0.0025 for interest rate per period, $ 150 for Pmt in the formula F V = P m t × ( 1 + i ) n − 1 i

Contemporary Mathematics For Business & Consumers, Loose-leaf Version

8th Edition

ISBN: 9781305867185

Author: Robert Brechner, Geroge Bergeman

Publisher: South-Western College Pub

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Chapter 12, Problem 3CR

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Chapter 12 Solutions

Contemporary Mathematics For Business & Consumers, Loose-leaf Version

Ch. 12.I - Freeport Bank is paying 8% interest compounded...Ch. 12.I - Vista Savings Loan is paying 6% interest...Ch. 12.I - Katrina Byrd invested $250 at the end of every...Ch. 12.I - Use Table 12-1 to calculate the future value of...Ch. 12.I - Use Table 12-1 to calculate the future value of...Ch. 12.I - Use Table 12-1 to calculate the future value of...Ch. 12.I - Use Table 12-1 to calculate the future value of...Ch. 12.I - Use Table 12-1 to calculate the future value of...Ch. 12.I - Use Table 12-1 to calculate the future value of...Ch. 12.I - Use Table 12-1 to calculate the future value of...

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The blank provided in the statement “An ordinary annuity is paid or received at the ___________ of each period.”

Solution Summary: The author explains that an ordinary annuity is paid or received at the end of each period. Compounding periods are the intervals during which payments are made.

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To fill: The blank provided in the statement “An ordinary annuity is paid or received at the ___________ of each period.”

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