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