Find the present and future values of an income stream of $6,000 per year for 17 years, assuming...

Question:

Find the present and future values of an income stream of $6,000 per year for 17 years, assuming a 2% interest rate compounded continuously.

Present value of Annuity Vs Future value of annuity

Present value of annuity with continuous compounding is used to find the current balance of a periodic payments that are compounded continuously. Future value of an annuity with continuous compounding is used to find the ending balance of a periodic payments that are compounded continuously.

Both are based on time value of money.

Answer and Explanation:

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Given that Annuity, {eq}A {/eq} = $6,000, Number of years, {eq}n {/eq} = 17 and Interest rate, {eq}i {/eq} = 2%

The present value of annuity...

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How to Find the Value of an Annuity

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Chapter 21 / Lesson 15
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An annuity is a type of savings account that pays back the investor in the future. Learn the formula used to calculate an annuity's value, and understand the importance of labeling specific numbers to calculate an output over time.


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