Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually. Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.
Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually. Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.
Solution Summary: The author calculates the future value of annuity of 400 paid each 6 months for 5 years at 12% compounded semiannually.
To compute:Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually.
Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.
b.
Summary Introduction
To compute: Future value of annuity of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly.
Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.
c.
Summary Introduction
To explain: The reason for annuity in part (b) is larger than annuity in part (a).
Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.