# 5-Minute Work-out for Future value and Present value of Annuities

### Dr. P. Peterson

## Future value of an ordinary annuity

Problem Periodic cash Number of Rate per Future value as
flow cash flows period of the last cash
flow
1 $1,000 5 4%
2 $100 40 1%
3 $2,000 20 2%
4 $1,000 10 5%
5 $1,000 12 1%

## Present value of an ordinary annuity

Problem Periodic cash Number of Rate per Present value of
flow cash flows period cash flows
1 $100 12 1%
2 $1,000 30 1%
3 $5,000 10 4%
4 $10,000 12 3%
5 $10,000 12 4%

# Solutions to 5-Minute Work-outs

# Future value and Present value of Annuities

## Future value of an ordinary annuity

Problem Periodic Number of Rate per Future value
cash flow cash flows period as of the
last cash
flow
1 $1,000 5 4% $5,416.32
2 $100 40 1% $4,888.64
3 $2,000 20 2% $48,594.74
4 $1,000 10 5% $12,577.89
5 $1,000 12 1% $12,682.50

Present value of an ordinary annuity

Problem Periodic Number of Rate per Present value
cash flow cash flows period of cash flows
1 $100 12 1% $1,125.51
2 $1,000 30 1% $25,807.71
3 $5,000 10 4% $40,554.48
4 $10,000 12 3% $99,540.04
5 $10,000 12 4% $93,850.74