# Calculation problems for Annuties and Interest

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• December 14th 2009, 06:59 PM
(?)G
Calculation problems for Annuties and Interest
Going off this site

The Present Value and Future Value of an Annuity; Annuity Due, Ordinary Annuity; Time Value, with Formulas and Examples; Discount Rate

I am trying to figure out how annuities and interest works.

So I decided to Calculate this:

100 * ((1+.005)120 -1)/.005

FVOA =

A * (1 + i)n - 1 / i

A= Amount
i= Interest
n= number of periods

According to the website the answer is $36,387.93 But when I put it in on my calculator, the answer is$16,387.93

My answer is exactly \$20,000 less than the answer the site gives.

Any reason for this?
• December 14th 2009, 07:20 PM
Bacterius
They made a mistake. According to their formula, your answer is correct.
• December 14th 2009, 07:22 PM
NOX Andrew
According to the website, the formula for the future value of an annuity is $FVOA = \frac{A[(1 + i)^n - 1]}{i}$. You multiplied $(1 + i)$ by $n$ instead of raising $(1 + i)$ to the $n$th power.
• December 14th 2009, 07:25 PM
Bacterius
Quote:

Originally Posted by NOX Andrew
According to the website, the formula for the future value of an annuity is $FVOA = \frac{A[(1 + i)^n - 1]}{i}$. You multiplied $(1 + i)$ by $n$ instead of raising $(1 + i)$ to the $n$th power.

NOX, I tried by raising to n (I did go onto the website to check) and it yields the same result. They indeed made a mistake.