11.8 Annuities: Practice Problems

For each of the following problems, solve for both the present- and future values of the given annuity – at the given rate and for the stated number of years. Try not to look at the solutions in the table below.

  1. $2000 each year for 5 years @ 5% = _________
  2. $1,000 each year for 10 years @ 5% = __________
  3. $1,000 each year for 10 years @ 10% = __________
  4. $500 every six months (semiannually) for 10 years @ 10% = __________
Problem FV/PV Dollars R ÷ P = N × P = Factor Solution
1 FV $2,000 5% 5 5.5256 $11,051.20
PV 4.3295 $8,659.00
2 FV $1,000 5% 10 12.578 $12,578.00
PV 7.7217 $7,721.70
3 FV $1,000 10% 10 15.937 $15,937.00
PV 6.1446 $6,144.60
4 FV $500 5% 20 33.006 $16,503.00
PV 12.4622 $6,231.00

 

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Introduction to Financial Analysis Copyright © 2022 by Kenneth S. Bigel is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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