11.8 Annuities: Practice Problems
For each of the following problems, solve for both the present- and future values of the given annuity – at the given rate and for the stated number of years. Try not to look at the solutions in the table below.
- $2000 each year for 5 years @ 5% = _________
- $1,000 each year for 10 years @ 5% = __________
- $1,000 each year for 10 years @ 10% = __________
- $500 every six months (semiannually) for 10 years @ 10% = __________
| Problem | FV/PV | Dollars | R ÷ P = | N × P = | Factor | Solution |
| 1 | FV | $2,000 | 5% | 5 | 5.5256 | $11,051.20 |
| PV | 4.3295 | $8,659.00 | ||||
| 2 | FV | $1,000 | 5% | 10 | 12.578 | $12,578.00 |
| PV | 7.7217 | $7,721.70 | ||||
| 3 | FV | $1,000 | 10% | 10 | 15.937 | $15,937.00 |
| PV | 6.1446 | $6,144.60 | ||||
| 4 | FV | $500 | 5% | 20 | 33.006 | $16,503.00 |
| PV | 12.4622 | $6,231.00 |