   Chapter 12, Problem 6CR ### 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 table factor for an annuity due is found by ____ one period to the number of periods of the annuity and then subtracting __ from the resulting table factor. (12-2)

To determine

To fill: The blanks provided in the statement “The table factor for an annuity is found by ___________ one period to the number of periods of the annuity and then subtracting ___________ from the resulting table factor.”

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

For example:

Consider that annuity payment is \$4,400, frequency of payment is 6 months, time duration is 8 years, nominal rate of return is 6% and interest is compounded semiannually.

The rate period is 3%(6%÷2 period per year).

The number of periods is 17(8 years×2 period per year+1).

From Table 12.1, the table factor for 3%, seventeen periods is 19

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