Quiz 12: Annuities

Business

To calculate future value (Amount) of an ordinary Annuity, use the following steps. 1. Calculate the interest rate per period for the annuity (nominal rate img periods per year) 2. Determine the number of periods of the annuity (years img periods per year) 3. From table 12-1, locate the ordinary annuity table factor at the intersection on the rate-per-period column and the number-of-period row. 4. Calculate the future value of the ordinary annuity. Future value img ordinary annuity table factor img Annuity payment (Ordinary annuity) Here, 1. The rate period is img ( img period year) 2. The number of period is img ( img years img period per year) 3. From table 12-1, the table factor for img periods is img . 4. Future value img ordinary annuity table factor img annuity payment. img Therefore, the required future value is img .

Payment or receipt of equal amounts of money per period for a specified amount of time is known as an Annuity.

To calculate future value (Amount) of an ordinary Annuity, use the following steps. 1. Calculate the interest rate per period for the annuity (nominal rate img periods per year) 2. Determine the number of periods of the annuity (years img periods per year) 3. From table 12-1, locate the ordinary annuity table factor at the intersection on the rate-per-period column and the number-of-period row. 4. Calculate the future value of the ordinary annuity. Future value img ordinary annuity table factor img Annuity payment (Ordinary annuity) Here, 1. The rate period is img ( img period year) 2. The number of period is img ( img years img period per year) 3. From table 12-1, the table factor for img periods is img . 4. Future value img ordinary annuity table factor img annuity payment. img Therefore, the required future value is img .

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