A.

Ans: To find the future value of annuity ordinary and annuity due we need to
use these following formulas:

FVn= PMT x [(1+i) ^n-1/i]

FVn= PMT x [(1+i) ^n-1/i] x (1+i)

Here,

PMT= payment

i= interest rate

n = number of years

FVn= future value of annuity

1.
Annuity C:
Since annuity C is an ordinary annuity, we need to use this following formula:

FVn= PMT x [(1+i) ^n-1/i] here, PMT= 2500

FVn= 2500 x [(1+.1) ^5-1/ .1] i= 10%

= 2500 x 6.1051 n=5 years
=$15,262.5
Annuity D:
Since annuity D is an annuity due here, we need to use this following formula:

FVn= PMT x [(1+i) ^n-1/i] x (1+i) here, PMT= 2200

FVn= 2200 x [(1+.1) ^5-1/ .1] x (1+.1) i= 10%

= 2200 x 6.1051 x 1.1 n=5 years
=$14,774.342

2.
Annuity C:
Since annuity C is an ordinary annuity, we need to use this following formula:
FVn= PMT x [(1+i) ^n-1/i] here, PMT= 2500

FVn= 2500 x [(1+.2) ^5-1/ .2] i= 20%

= 2500 x 7.4416 n=5 years
=$18,604
Annuity D:

Since annuity D is an annuity due here, we need to use this following formula:

FVn= PMT x [(1+i) ^n-1/i] x (1+i) here, PMT= 2200

FVn= 2200 x [(1+.2) ^5-1/ .2] x (1+.2) i= 20%
= 2200 x 7.4416 x 1.2 n=5 years
=2200x 8.92992
=$19,645.832

B. Ans: Using my findings in part A to indicate, in “1” Annuity C presents a greater

future and in “2” annuity D presents great future value.

C. Ans: Showing the future value of ordinary and due through time line on
the above solutions:
1. Annuity C
Finding future value of ordinary annuity by time line:
To calculate future value of annuity ordinary, the formula we have to use is,

FVn= PMT x [(1+i) ^n-1/i]

PMT= payment

i= interest rate

n = number of years

FVn= future value of annuity

Here,

FVn= 2500 x [(1+.1) ^5-1/ .1]

= 2500 x 6.1051
=$15,262.5
Annuity D
Finding future value of annuity due by time line:
To calculate future value of annuity due, the formula we have to use is,

FVn= PMT x [(1+i) ^n-1/i] x (1+i)

PMT= payment

i= interest rate
n = number of years

FVn= future value of annuity

Here,

FVn= 2200 x [(1+.1) ^5-1/ .1] x (1+.1)

= 2200 x 6.1051 x 1.1
=$14,774.342

2. Annuity C

Finding future value of ordinary annuity by time line:

to calculate future value of annuity ordinary, the formula we have to use is,

FVn= PMT x [(1+i) ^n-1/i]

PMT= payment
i= interest rate

n = number of years

FVn= future value of annuity

Here,

FVn= 2500 x [(1+.2) ^5-1/ .2]

= 2500 x 7.4416
=$18,604

Annuity D
Finding future value of annuity due by time line:
To calculate future value of annuity due, the formula we have to use is,

FVn= PMT x [(1+i) ^n-1/i] x (1+i)

PMT= payment

i= interest rate

n = number of years

FVn= future value of annuity

Here,

FVn= 2200 x [(1+.2) ^5-1/ .2] x (1+.2)

= 2200 x 7.4416 x 1.2
=2200x 8.92992
=$19,645.832