Re: Help with annuities due.

i would hope these formulae are in your textbook.

Notation varies by country and teacher, the formulae i was taught are:

**Definitions**

i = interest rate (compounded once per period)

n = number of periods

S = total payment per period

FV = future value

d = rate of discount

**formulae**

$\displaystyle d = \frac{i}{1+i}$

$\displaystyle FV = S \frac{(1+i)^n - 1}{d}$

**Answer**

subbing your numbers in (i assume R was the annual payment):

$\displaystyle d = 0.075/1.075 = 0.069767$

$\displaystyle FV = 1200 \times \frac{1.075^8 - 1}{0.069767} = 13475.82$

Now, for the interest earned. The final value must be equal to the Cash invested plus interest., so

13475.82 = (cash invested) + (interest paid)

You know that the cash invested is 1200*8, so:

$\displaystyle 13475.82 = 1200 \times 8 + (interest~paid)$

$\displaystyle 3875.82 = (interest~paid)$

You try the other one.

A more detailed overview of annuity formulae is here if required:

http://www.mathhelpforum.com/math-he...gfan+annuities

Re: Help with annuities due.

So what's the formula for interest earned? I forget which is the interest paid and how to do so and I couldn't find it in that link you provided.

Re: Help with annuities due.

Quote:

Originally Posted by

**SpringFan25** Now, for the interest earned. The final value must be equal to the Cash invested plus interest., so

13475.82 = (cash invested) + (interest paid)

You know that the cash invested is 1200*8, so:

$\displaystyle 13475.82 = 1200 \times 8 + (interest~paid)$

$\displaystyle 3875.82 = (interest~paid)$

as above