Calculating The Future Value Of An Annuity - Texas Instruments BA II Plus User Manual

Insurer A
Sequence of entries
CE/C > 2ND > CLR TVM
2ND > P/Y > 1 > ENTER
CE/C > CE/C
5 > N
6 > I/Y
4,000 > +/− > PV
CPT > FV
Insurer B
Sequence of entries
CE/C > 2ND > CLR TVM
2ND > P/Y > 2 > ENTER
CE/C > CE/C
5 > 2ND > xP/Y > N
5.95 > I/Y
4,000 > +/− > PV
CPT > FV
The investment proposed by Insurer B returns a greater cumulative value, after five years, of
approximately $9.73.

Calculating the future value of an annuity

A client would like to invest $2,500 per year over the next five years. He would like to know what
the cumulative value of the investment would be in five years if the annual realized rate were 5%
in a situation where the investment is made at the beginning of the year and in a situation where
the investment is made at the end of the year.
Display
0
P/Y = 1
0
N = 5
I/Y = 6
PV = − 4,000
FV = 5,352.90231
Display
0 Resets the default values.
P/Y = 2 Enters a semi-annual payment period.
0 Exits the entry of the P/Y variable.
N = 10 Enters the number of periods over five
years.
I/Y = 5.95 Enters a nominal interest rate of 5.95%.
PV = − 4,000
Enters the present value of the investment.
FV = 5,362.632027 Calculates the final value of the
investment.
Explanation
Resets the default values.
Enters an annual payment period.
Exits the entry of the P/Y variable.
Enters a five-year period.
Enters an annual interest rate of 6%.
Enters the present value of the
investment.
Calculates the final value of the
investment.
Explanation
6