A bank pays 10% interest compounded continuously.
what is the future value of a 5 year ordinary annuity with payments of 2000 each?
what is the formula for future value of an ordinary annuity with interest compounded continuously?
19
Feb
Redd
February 19, 2010 at 2:41 am
FVoa = PMT [((1 + i)^n - 1) / i]
Where:
FVoa = Future Value of an Ordinary Annuity
PMT = Amount of each payment
i = Interest Rate Per Period
n = Number of Periods
FVoa = 2000 [((1 + 0.1)^5 - 1) /0.1]
= 2000[(1.1)^5 - 1)/0.1]
= 2000(1.61051 – 1)/0.1
= 2000(0.61051/0.1)
= 2000(6.1051)
= 12,210.20
Didn't hire me? Your mistake
February 19, 2010 at 3:01 am
Hey, you down there, it’s a continuous annuity bub.