This Problem Demonstrates the Dependence of the Future Value of an Annuity

question 185

Essay

This problem demonstrates the dependence of the future value of an annuity on the number of payments. Suppose $1,000 is invested at the end of each year. Assume the investments earn 5% compounded annually. Calculate the future value of the investments after each of the following numbers of payments:
a) 5 b) 10 c) 15 d) 20 e) 25 f) 30
Note that the future value increases proportionately more than n as n is increased.

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Definitions:

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James-Lange Theory

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