Question

6-1. (Calculating the future value of an ordinary annuity) Calculate the future value of each of the following streams of payments. a. £430 a year for 12 years compounded annually at 6 percent. b. €56 a year for 8 years compounded annually at 8 percent. e. $75 a year for 5 years compounded annually at 3 percent. d. £120 a year for 3 years compounded annually at 10 percent.

Answer 1

a)	Future Value of Annuity =	P ( (1 + r)n - 1 ) / r
		430* ((1 + 6%)^12 - 1) / (6%)
		7254.07	POUNDS
b)	Future Value of Annuity =	P ( (1 + r)n - 1 ) / r
		56* ((1 + 8%)^8 - 1) / (8%)
		595.65	EURO
c)	Future Value of Annuity =	P ( (1 + r)n - 1 ) / r
		75* ((1 + 3%)^5 - 1) / (3%)
		398.19	DOLLARS
d)	Future Value of Annuity =	P ( (1 + r)n - 1 ) / r
		120* ((1 + 10%)^3 - 1) / (10%)
		397.20	POUND