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Compound Annuity Calculator

Posted on February 28, 2010.
Compound Annuity CalculatorWhat nominal interest rate must the analyst be using to find the future value of this problem?

If it was assessed with an interest rate of zero percent, a pension of 10 years would have a common present value of $ 4,000. If the future (up) the value of this annuity, evaluated at the 10th year, is $ 6,425, the nominal interest rate must the analyst be used to find the future value?

I see two ways to do this problem.

1) With a value of $ 4,000 currently to a zero interest rate, the payment amount is equal to the current value divided by the number of periods (10). Thus, the amount of payment is 400.
Now that we have the payment amount, we can connect the rest of the data in the calculator:

FV = 6425
PMT = 400
N = 10
I / Y =?
Calculated: I / Y = 10.16296890% or 10.16%

or

2)
PV = 4000
FV = 6425
N = 10
I / Y =?
Calculated? I / Y = 4.85310944

Which (if either) is correct?

Sorry. I can not do that!

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