   Chapter 12, Problem 5CR ### 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

# The total amount of the annuity payments and the accumulated interest on those payments is known as the ___ value of an annuity.(12-1)

To determine

To fill: The blank provided in the statement “The total amount of annuity payments and the accumulated interest on those payments is known as the_________ value of an annuity.”

Explanation

The formula to compute the future value of ordinary annuity is,

Future Value=Annuity due table factor×Annuity payment

Annuity due table factor=Ordinary annuity table factor1.00000

Consider that annuity payment is \$1,850, frequency of payment is 6 months, time duration is 12 years, nominal rate of return is 10% and interest is compounded semiannually.

The rate period is 5%(10%÷2 period per year).

The number of periods is 25(12 years×2 period per year+1).

From Table 12.1, the table factor for 5%, twenty-five periods are 47

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