   Chapter 12.I, Problem 3RE ### 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

# Use Table 12-1 to calculate the future value of the following annuities due. Annuity Payment Time Nominal Interest Future Value Payment Frequency Period (years) Rate (%) Compounded of the Annuity 3. $10,000 every year 10 9 annually ________________ To determine To calculate: The future value of ordinary annuities where annuity payment is$10,000, frequency of payment is 1 year, time duration is 10 years, nominal rate of return is 9% and interest is compounded annually.

Explanation

Given Information:

Annuity payment is $10,000, frequency of payment is 1 year, time duration is 10 years, nominal rate of return is 9% and interest is compounded annually. Formula used: Steps for calculating the future value of an ordinary annuity are: Step1: First the interest rate per period for the annuity is calculated. Step2: The number of annuity periods should then be determined. Step 3: Use table 12-1 to locate the ordinary annuity table factor that lies on the intersection of the rate-per period column and number-of-periods row. Step 4: Finally future value of the ordinary annuity is calculated. The formula to compute the future value of ordinary annuity is, Future Value=Ordinary annuity table factor×Annuity payment Calculation: Consider that Annuity payment is$10,000, frequency of payment is 1 year, time duration is 10 years, nominal rate of return is 9% and interest is compounded annually.

As the interest is compounded annually. So, the interest rate period is;

9%1=9%

The rate period is 9%

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