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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 5th year.
FV = 2000 {(1+.05) 5- 1}/.05
FV = Rs. 11054
Interest Rates The payment borrowers make for the use of the funds that they borrow and the payment that lenders demand for the use of the funds they lend (termed interest ) w
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