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Peter will receive $1200 at the beginning of each of the next 7 years. What is the future value of this annuity, assuming the interest rate is 9% compounded annually? ( Round to the nearest whole dollar)

Jun 23rd, 2015

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Jun 23rd, 2015

The future value of 7 annual receipts of $1,200.00, received at the end of each period, and earning an annual interest rate of 9.000%, would be $11,040.52 -- of which $8,400.00 is the total of the receipts and $2,640.52 is the total interest earnings.

Please note that the $2,640.52 also represents the financial opportunity cost of spending $1,200.00 per year for 7 years on non-essential expenditures that lose their value with time and/or use.


YearReceipts
InterestBalance
1$1,200.00$0.00$1,200.00
2$1,200.00$108.00$2,508.00
3$1,200.00$225.72$3,933.72
4$1,200.00$354.03$5,487.75
5$1,200.00$493.90$7,181.65
6$1,200.00$646.35$9,028.00
7$1,200.00$812.52$11,040.52
Totals$8,400.00$2,640.52$11,040.52
FV = 11040.52

Jun 23rd, 2015

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