   Chapter 12, Problem 22AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Solve the following exercises by using formulas. Ordinary annuity Annuity Payment Time Nominal Interest Future Value Payment Frequency Period (years) Rate (%) Compounded of the Annuity 22. $5,600 every year 9 1.8 annually To determine To calculate: The future value of ordinary annuities where annuity payment is$5,600, the frequency of payment is 1 the year, the time duration is 9 years, the nominal rate of return is 1.8% and interest is compounded annually.

Explanation

Given Information:

Annuity payment is $5,600, the frequency of payment is 1 the year, the time duration is 9 years, the nominal rate of return is 1.8% and interest is compounded annually. Formula used: The formula for future value of the ordinary annuity is, FV=Pmt×(1+i)n1i Here, FV is the future value, Pmt is the Annuity payment, i is the interest rate per period (nominal rate ÷ periods per year) and n is the number of periods (years × periods per year). Calculation: Consider that the annuity payment is$5,600, the frequency of payment is 1 the year, the time duration is 9 years, the nominal rate of return is 1.8% and interest is compounded annually.

The rate period is 1.8%(1.8%÷1 period per year).

The number of periods is 9(9 years×1 period per year).

Substitute 9 for a number of periods, 0

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