Answer:
The future value of a 5%, 5-year ordinary annuity that pays $350 each year is $1,933.97
If this were an annuity due, its future value is $2,030.67
Explanation:
Rate: 5%
Annual payment: ($350)
Tenor: 5 years
We can use excel to calculate the future value =FV(rate,tenor,payment,type)
=(5%,5,-350,,0)= $1,933.97
type "0" is payment at end of period (at year end).
Annuity due is an annuity whose payment is due immediately at the beginning of each period, so type for this is "1)
= (5%,5,-350,,1) = $2,030.67
Please see excel attached for more details
