Using the formula for the future value of an annuity:
FV = P * ((1 + r)^n - 1) / r
where:
P = payment amount
r = interest rate
n = number of payments
For the first set of payments:
FV1 = 10,000 * ((1 + 0.07)^5 - 1) / 0.07 = $63,589.32
For the second set of payments:
FV2 = 5,000 * ((1 + 0.07)^5 - 1) / 0.07 = $31,794.66
The total future value of all payments is:
FV = FV1 + FV2 = $95,383.98
You receive five annual payments of $10,000 followed by five
annual payments of $5,000. what is the future value of all payments
at the time of the last payment when the interest rate is 7%
1 answer