Find the future value and the present value of an annuity of 3500 payable at the end of each month for three years of the interest rate is (a) 5% compounded annually, and (b) 5% compounded quarterly.
Given information
Monthly Annuity Payment = 3500
Time Period = 3 years
Part a The Interest rate =5%compounded annually
Part b The Interest rate =5% compounded quarterly
Part a
Future Value of Annuity
It can be computed as follows:
Present Value of an annuity
It can be calculated as follows:
Part b
Future Value of annuity
It can be computed as follows:
Present Value of an annuity
It can be calculated as follows:
Answers :
Part a Future Value and Present Value of annuity at 5% interest rate compounded annually are 1,35,636.67 and 1,16,779.95 respectively
Part b Future Value and Present Value of annuity at 5% interest rate compounded quarterly are 1,35,827.83 and 1,16,614.74 respectively
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