Answer to Question #121033 in Financial Math for manshika

Question

Find the present and future value of $1000 received every month end for 20 years if the interest rate is J12 = 12% p.a.

Answer 1

PVOA is present value of an annuity

$PVOA= payment * {1-(1+r ){^{-n}}\above{2pt} r}$

$PVOA= 1,000 * {1-(1+0.01 ){^-}{^2}{^4}{^0}\above{2pt} 0.01}$

$PVOA= 90,819.42/$

FVOA is future value of an annuity

$FVOA= payment * {(1+r ){^n}-1 \above{2pt} r}$

$FVOA= 1,000 * {(1+0.01 ){^2{^4}{^0}}-1 \above{2pt} 0.01}$

$FVOA= 989,255.37/$