Q. Explain Compound Value of an Annuity?
Compound Value of an Annuity: - Annuity demotes to the periodic flows of equal amounts.
FV = A {(1+i)n - 1}/i
Instance: - Mr. X invests Rs. 2000 at the end of every year for 5 years into his account interest being 5% compounded annually. Conclude the amount of money he will have at the end of the 5^{th} year.
FV = 2000 {(1+.05) ^{5}- 1}/.05
FV = Rs. 11054