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Math Help - Calculation problems for Annuties and Interest

  1. #1
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    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?
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  2. #2
    Super Member Bacterius's Avatar
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    They made a mistake. According to their formula, your answer is correct.
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  3. #3
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    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 nth power.
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  4. #4
    Super Member Bacterius's Avatar
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    Quote Originally Posted by NOX Andrew View Post
    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 nth 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.
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