Explanation Given Information: An ordinary annuity with annual payment of $3000 paid at 3 .8% annual interest for two years. Formula used: First end of period principal = annuity payment End of period principal = previous end of period principal ( 1 + period interest rate ) + annuity payment And, Future Value = End of period principal Also: Total invested = payment amount × number of payments And: Total interest = Future value of annuity − total invested Calculation: Consider an ordinary annuity with annual payment of $3000 paid annually at 3 .8% annual interest for two years. The annuity payment is $3000 and the annual interest rate is 3 .8% since the investment is made for annually. Therefore: End of period principal = previous end of period principal ( 1 + 0.038 ) + $ 3000 The first end of year principal will be: End of year 1 = annuity payment = $ 3000 Now, the value at the end of second year is: End of year 2 = $3000 ( 1 + 0

Portfolio of Accounting Systems for Small and Medium-Sized Businesses.

11th Edition

ISBN: 9780136857761

Author: National Society of Public Accountants Staff

Publisher: Prentice Hall

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Chapter 14.1, Problem 1SE

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The future value and total interest of an ordinary annuity with annual payment of $3000 paid at 3.8% annual interest for two years.

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Chapter 14.1, Problem 6-6SC

Chapter 14.1, Problem 2SE

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Chapter 14 Solutions

Portfolio of Accounting Systems for Small and Medium-Sized Businesses.

Ch. 14.1 - Prob. 1-1SC Ch. 14.1 - Prob. 1-2SC Ch. 14.1 - Prob. 1-3SC Ch. 14.1 - Prob. 1-4SC Ch. 14.1 - Prob. 2-1SC Ch. 14.1 - Prob. 2-2SC Ch. 14.1 - Prob. 2-3SC Ch. 14.1 - Prob. 2-4SC Ch. 14.1 - Prob. 2-5SC Ch. 14.1 - Prob. 2-6SC

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The future value and total interest of an ordinary annuity with annual payment of $3000 paid at 3 .8% annual interest for two years.

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The future value and total interest of an ordinary annuity with annual payment of $3000 paid at 3.8% annual interest for two years.

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