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FVN = PV(1+I)N
N=4
I=3
PV = $1,000
FVN = PV(1+I)N
FV4 = 1,000(1+.03)4
FV4 = 1,000(1.125509)
FV4 = $1,125.51
FVN
PV =
(1 + I ) N
N=3
I=5
FV3 = $1,000
1, 000
= = $863.84
1.1576
ordinary annuity
annuity due
(1 + I ) 1 N
FVAN = PMT
I
N=4
I=3
PMT = $1,000
(1 + I ) 1 N
FVAN = PMT
I
= 1,092.73 + 1,060.90 +
1,030.00 + 1,000.00
= $4,183.63
FVAdue = FVAordinary(1+I)
4,183.63(1+.03) = $4,309.14
1
1
(1 + I )N
PVAN = PMT
I
(c) ECI RISK TRAINING 2009
www.ecirisktraining.com 29
where:
N=3
I=5
PMT = $1,000
1
1
(1 + I )N
PVAN = PMT
I
PVAdue = PVAordinary(1+I)
2,723.25(1+.05) = $2,859.41