To find the future value of an annuity due, you multiply the future value of an ordinary

Question:

To find the future value of an annuity due, you multiply the future value of an ordinary annuity by the sum of 1 + the period interest rate. Explain why this is the same as adding the simple interest earned on the first payment for the entire length of the annuity?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...
Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Business Math

ISBN: 978-0133011203

10th edition

Authors: Cheryl Cleaves, Margie Hobbs, Jeffrey Noble

Question Posted: