What is the future value of a 8%, 5-year ordinary annuity that pays $400 each year? Round your answer to the nearest cent

Accounting Jan 20, 2021

What is the future value of a 8%, 5-year ordinary annuity that pays $400 each year? Round your answer to the nearest cent. $ If this were an annuity due, what would its future value be? Round your answer to the nearest cent. $

Expert Solution

A. Computation of future value of annuity for 5 years of $400 per annum of 8?.

Amount investment $400

FVIF (8?, 5 YEARS ) = 5.866

Future value of annuity = $400 × 5.866 = $2344

B. If the annuity due,

=( 1 + interest rate ) × $400 × 5.866

= (1+0.08 ) ×$400×5.866

=$ 2,532

Please like...., happy chegging. Tnq

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