Jessica deposits $5,000 at the end of each year in an account earning 2.45% interest, compounded annually. What is the future va
lue of this annuity after 5 years of investing?
Do I need to use the ordinary annuity formula or the annuity due formula to solve this?
Do I need to use the ordinary annuity formula or the annuity due formula to solve this?
1 answer:
Hi there
If the amount deposited at (end) of each year, use the formula of the (future/present) value of annuity ordinary
If the amount deposited at the (beginning) of each year use the formula of the (future/present) value of annuity due
So
FvAo=5,000×(((1+0.0245)^(5)−1)
÷(0.0245))
=26,255.38...answer
Hope it helps
If the amount deposited at (end) of each year, use the formula of the (future/present) value of annuity ordinary
If the amount deposited at the (beginning) of each year use the formula of the (future/present) value of annuity due
So
FvAo=5,000×(((1+0.0245)^(5)−1)
÷(0.0245))
=26,255.38...answer
Hope it helps
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