Answer to Question #287835 in Financial Math for meng

Question

annual payment php 2,000.00 at the end of each term for 5 years with interest rate of 7.5% compounded quarterly.find the present and the future value

Answer 1

Present value is the sum of money that must be invested in order to achieve a specific future goal. Future value is the dollar amount that will accrue over time when that sum is invested.

The formula for the future value of an ordinary annuity is:

$FV = 2,000×((1 + 0.075/4)^{20} - 1)/(0.075/4) = 47,994.46.$

The formula for the present value of an ordinary annuity is:

$PV = 2,000×(1 – 1/(1+0.075/4)^{20})/(0.075/4) = 33,100.81.$