Future and Present Value of an Annuity Due If you start making $100 monthly contributions today and continue them for 5 years, what's their future value if the compounding rate is 10 percent APR? What is the present value of this annuity?
A) $508.14, $487.74
B) $512.64, $491.80
C) $7,743.71, $4,706.53
D) $7,808.24, $4,745.78

Question

Quizplus · Accepted Answer

The future value of an annuity due is calculated using the formula FV = P * [(1 + r)^nt - 1] * (1 + r) / r, where P is the payment, r is the monthly interest rate, and nt is the total number of payments. The present value is calculated using PV = P * [1 - (1 + r)^-nt] * (1 + r) / r. Using these formulas with the given values, the correct future and present values are $7,808.24 and $4,745.78, respectively.

Future and Present Value of an Annuity Due If You