Indicate which formula is correct to determine the future value of an annuity due.
A) FVAs = PMT × [FVIFAi,n/(1 + i)]
B) FVAs = PMT × FVIFAi,n
C) FVAs = PMT × FVIFAi,n+1
D) FVAs = PMT × [FVIFAi,n × (1 + i)]

Question

Quizplus · Accepted Answer

The future value of an annuity due is calculated by multiplying the future value interest factor of an annuity (FVIFA) by (1 + i) because payments are made at the beginning of each period, thus earning interest for one additional period.

Indicate Which Formula Is Correct to Determine the Future Value