Uniform Series: Calculate The Future Value Of Annuities.

A man deposits $500 in a credit union at the end of each year for 5 years. The credit union pays
5% interest, compoundedannually.At the end of 5 years, immediately after the fifth deposit, how much does the man have in his account?

SOLUTION

The diagram on the left shows the situation from the man's point of view; the one on the right, from the credit union's point of view.Eitherway,-thediagramof the five deposits and the desired computation of the future sum F duplicates the situationfor the uniformseries compound amount formula

There will be $2763 in the account following the fifth deposit.

If Equation 4-5 is solved for A, we have

where

is called the uniformseries sinking fund2 factor and is written as (AI F, i, n).

2A sinking fund is a separate fund into which one makes a unifonn series of money deposits (A) with
the goal of accumulating some desired future sum (F) at a given future point in time.