SOLUTION: I would like to know if I am on the right track or not in answering this question. 5-5A (compound annuity) What is the accumulated sum of each of the following streams of payments?

Question 197401This question is from textbook Financial Management: Principles and Applications
: I would like to know if I am on the right track or not in answering this question. 5-5A (compound annuity) What is the accumulated sum of each of the following streams of payments?
d. $25 a year for 3 years compounded annually at 2 percent
This is what I have done:
25.00 + 25.00(1+.02) + 25.00(1+.02)^2 = 76.51
Am I on the right track?
This question is from textbook Financial Management: Principles and Applications

Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
What is the accumulated sum of each of the following streams of payments?
d. $25 a year for 3 years compounded annually at 2 percent
This is what I have done:
25.00 + 25.00(1+.02) + 25.00(1+.02)^2 = 76.51
---------------------------------------------
Assume that the 1st $25 is in for 3 years : 25(1.02)^3
Assume that the 2nd $25 is in for 2 years : 25(1.02)^2
Assume that the 3rd $25 is in for 1 year : 25(1.02)
-------------------------------------------------
Is that what you are looking for?
Cheers,
Stan H.

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