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Lump sum of an annuity due?

An annuity due consists of 10 payments in return for a lump sum received a year after the final payment. The initial payment is $100 but each year the payment increases by 10%. The annual interest rate is 5% p.a..

Calculate the present value and the lump sum received at the end

2 Answers

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  • Don G
    Lv 7
    9 years ago
    Favorite Answer

    If each payment increases by 10%, it is a growing annuity. See the formula for the PV of a growing annuity. Or simply determine each year's payment manually, then get each year's FV.

    Then add the 10 amounts to get the lump sum received at the end of year 10.

  • Anonymous
    5 years ago

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