if we assume that $500 is invested every year at 6% to be annuity due, the future value will increase due to compounding for one additional year. what is the future value of the annuity due?
+37170 If the FIRST payment of 500 is at the end of year one, then the following equation applies:
FV= A (( 1+i)^n-1 ) / i Results in ???? We do not have all of the information....HOW MANY YEARS???????
ElectricPavlov:
You got the formula right for the FV of ordinary annuity. However, he/she wants the FV of an "annuity due", which basically means that the annuity payments are made at the BEGINNING of the period instead of at the END of the period. As a result, your formula needs slight adjustment to account for that, namely: after the FV is obtained, you have to multiply it by [1 + i ] to give the FV of the " annuity due".
+37170 Aahhhh.... thanx for the clarification, Guest......but I still need the number of years...unless there is a standard .
