QuestionJune 5, 2025

True or False Question True or false: To calculate the future value of multiple annuities, simply compute the future value of each one separately and add them together. True False

True or False Question True or false: To calculate the future value of multiple annuities, simply compute the future value of each one separately and add them together. True False
True or False Question
True or false: To calculate the future value of multiple annuities, simply compute the future value of each one separately and add them together.
True
False

Solution
4.2(298 votes)

Answer

True Explanation 1. Understand Future Value of Annuities The future value of an annuity is calculated using the formula FV = P \times \frac{(1 + r)^n - 1}{r}, where P is the payment, r is the interest rate, and n is the number of periods. 2. Calculate Separately and Add For multiple annuities, calculate the future value of each annuity separately using the above formula, then sum them to get the total future value.

Explanation

1. Understand Future Value of Annuities<br /> The future value of an annuity is calculated using the formula $FV = P \times \frac{(1 + r)^n - 1}{r}$, where $P$ is the payment, $r$ is the interest rate, and $n$ is the number of periods.<br /><br />2. Calculate Separately and Add<br /> For multiple annuities, calculate the future value of each annuity separately using the above formula, then sum them to get the total future value.
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