Use the future value formula to find the indicated value. n=20;i=0.03;PMT=$80;FV=?

Answer 1

So you are asked to find the future value of an annuity where interest rate =3%, payment periods =20 and payments =$80, Future Value of an annuity is FV=PMT((1+i)ⁿ-1/i) if it is an ordinary annuity (receive payment at the end of the period), an annuity due is where you receive the payment at the start of the period so you can start receiving interest on it immediately. The formula for an annuity due is an ordinary annuity *(1+i)

Since it's not clear which type of annuity we are working with I will show you both:

Ordinary Annuity: FV=(80(1+.03)²⁰-1)/.03=$4782.96

Annuity Due: FV=4782.96(1+.03)=$4926.45