1. How is the annuity formula ?different from the regular compound interest formula FV = PV(1 + i)ⁿ?

    

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1. How is the annuity formula FV equals P M T open square brackets fraction numerator left parenthesis 1 plus i right parenthesis to the power of n minus 1 over denominator i end fraction close square brackets ?different from the regular compound interest formula FV = PV(1 + i)n? O O The annuity formula is used to find the future value of several payments. The annuity formula is used to find how much a single payment is worth later. QUESTION 2 1. Which one of the following situations is an annuity? A loan of $1000 is paid off with 5 equal monthly payments with 1% compounded monthly. How much was the loan for? How much will you need to invest today to end up with $2000 after a year with 4% compounded annually? A deposit of $1000 earns 2% every month for 2 years. How much is earned by the end of 2 years? QUESTION 3 1. We have already looked at finding equivalent payments. Consider the situation: A loan of $5000 is paid off in 3 equal payments in one month, two months, and three months from now. If interest is 10% compounded monthly, how much are the equal payments? Can we use an annuity formula to find the payment? ?True O?False 1. How is the annuity formula FV equals P M T open square brackets fraction numerator left parenthesis 1 plus i right parenthesis to the power of n minus 1 over denominator i end fraction close square brackets ?different from the regular compound interest formula FV = PV(1 + i)n? O O The annuity formula is used to find the future value of several payments. The annuity formula is used to find how much a single payment is worth later. QUESTION 2 1. Which one of the following situations is an annuity? A loan of $1000 is paid off with 5 equal monthly payments with 1% compounded monthly. How much was the loan for? How much will you need to invest today to end up with $2000 after a year with 4% compounded annually? A deposit of $1000 earns 2% every month for 2 years. How much is earned by the end of 2 years? QUESTION 3 1. We have already looked at finding equivalent payments. Consider the situation: A loan of $5000 is paid off in 3 equal payments in one month, two months, and three months from now. If interest is 10% compounded monthly, how much are the equal payments? Can we use an annuity formula to find the payment? ?True O?False