Future Value of an Annuity Explained

The video tutorial explains the concept of annuities, focusing on ordinary annuities and annuities due. It provides examples of manual calculations for future value and introduces formulas to simplify these calculations. The tutorial also compares the future values of ordinary annuities and annuities due, highlighting the impact of deposit timing on interest accumulation.

Which type of annuity was used as an example for saving for a child's college education?

• Variable annuity

• Annuity due

• Fixed annuity

• Ordinary annuity

Tags

CCSS.HSF.BF.A.2

What interest rate was used in the examples provided for calculating future values of annuities?

• 10%

• 7%

• 5%

• 3%

Tags

CCSS.HSF.BF.A.2

What type of annuity involves deposits made at the end of each period?

• Annuity due

• Deferred annuity

• Immediate annuity

• Ordinary annuity

Tags

CCSS.HSF-LE.A.1B

In the manual calculation example, what was the closing balance at the end of the fifth year?

• $12,930.38

• $9,457.50

• $15,000.00

• $16,576.90

What is the formula used to calculate the future value of an ordinary annuity?

• Pmt - ((1 + i)^n - 1) / i

• Pmt * ((1 + i)^n - 1) / i

• Pmt / ((1 + i)^n - 1) * i

• Pmt + ((1 + i)^n - 1) / i

How often were deposits made in Jorge Otero's ordinary annuity?

• Bi-annually

• Annually

• Quarterly

• Monthly

Tags

CCSS.8.EE.C.7B

What was the future value of Jorge Otero's ordinary annuity after 10 years?

• $18,500.00

• $20,000.00

• $23,292.34

• $25,000.00

What was the future value of Jorge Otero's annuity due after 10 years?

• $24,000.00

• $23,292.34

• $22,500.00

• $23,389.39

What factor is added in the formula for the future value of an annuity due?

• (1 - i)

• None

• (i - 1)

• (1 + i)

What is the impact of making deposits at the beginning of the period in an annuity due?

• Changes the deposit frequency

• No impact on the future value

• Increases the future value

• Decreases the future value