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    Future value of an annuity: streams of payment

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    What is the accumulated sum of each of the following streams of payments?

    1. $500 a year for 10 years compounded annually at 5 percent
    2. $100 a year for 5 years compounded annually at 10 percent
    3. $35 a year for 7 years compounded annually at 7 percent
    4. $25 a year for 3 years compounded annually at 2 percent

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    Solution Preview

    We are being asked to calculate the future value of an annuity

    Annuity years (n) interest ( r ) Future value factor for annuity= ((1+r)^n-1)/r= Accumulated ...