CFIN
CFIN
6th Edition
ISBN: 9780357144039
Author: BESLEY
Publisher: CENGAGE L
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Chapter 4, Problem 9PROB
Summary Introduction

The annual payment is $385 for the next eight years at 7% compounded annually.

Future value of an annuity is the total future value of a series of periodic payments made at the end of each year at a given interest rate for a specified period.

FVAnnuity=P[(1+r)n1r]

Future value of an annuity due is the total future value of a series of periodic payments made at the beginning of each year at a given interest rate for a specified period.

FVAnnuity due=P[((1+r)n1)×(1+r)r]

Here,

The future value annuity is “FVAnnuity”.

The periodic payments are “P”.

The interest rate is “r”.

The maturity period of time period is “n”.

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