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Calculate the following Future Value of an Annuity and note the relationships between Future Value of an Annuity and interest rates and the length of time of the investment. Future Value of an Annuity: amount by which a series of equal payments (definition of annuity) will grow when invested at an interest rate for a specified amount of time

Examples of annuities: car/house payments when the interest rate does not change; apartment rent; paychecks when you get paid a fixed salary (can be weekly, biweekly, monthly, etc)

Future Value of Annuity (FVA):

Years invested remains at 5 years; the interest rate changes

1. FVA of $100 invested each year at 3% for 5 years:

2. FVA of $100 invested each year at 5% for 5 years:

3. FVA of $100 invested each year at 7% for 5 years:

4. As interest rate increases, the FVA ______________.

Versus

The interest rate remains at 3%; the years invested changes

1. FVA of $100 invested each year at 3% for 5 years:

2. FVA of $100 invested each year at 3% for 10 years:

3. FVA of $100 invested each year at 3% for 15 years:

4. As the length of time the money is invested increases, the FVA ___________.

What is the major difference of the two parts?