Formula of annuity, Financial Accounting

Assignment Help:

In common terms the future value of an annuity or regular annuity is specified by the subsequent formula:

FVAn = A (1 + k )n -1 + A (1 + k )n - 2 + ... + A   ................................Eq(6)

1133_Formula of annuity.png

A [((1 + k)n - 1)/k]

Future value of an annuity due:

FVAn(due) = A (1 + k )n + A (1 + k )n - 1 + ... + A(1 + k)   ................................Eq(6)

2093_Formula of annuity1.png....................................Eq(7)

= A [((1 + k)n - 1)/k] (1 + k)

Here FVAn = Future value of an annuity that has a duration of n periods

A   = Constant periodic cash flow;

 k = Interest rate per period;

n = duration of the annuity.

The term [((1 + k)n - 1)/k] is considered to as the future value interest factor for an annuity (FVIFAk,n). The value of its factor for some combinations of k and n are specified in the appendix at the end of this section.


Related Discussions:- Formula of annuity

HELP!, How do you know what goes on an income statement? P.S. This is a bas...

How do you know what goes on an income statement? P.S. This is a basic income statement.

Illustration regarding profit that head office can claim, Illustration rega...

Illustration regarding profit that head office can claim E Ltd sets up a branch in Nyeri on 1 July 2001. Goods are sent to branch at an invoice price which is 10% above cost. S

Control of business activity, A huge number of financial ratios are in util...

A huge number of financial ratios are in utilized. They complete a broad variety of functions and objectives. Managers estimate performance and investors match their expectations,

Explain the transaction exposure versus economic exposure, Explain the Tran...

Explain the Transaction Exposure versus Economic Exposure? In brief describe the following term: a) Spot market and forward market.  b) Purchasing Power Parity or PPP.

Business risk in company, Q. Business risk in company? Business risk is...

Q. Business risk in company? Business risk is the likelihood of a company experiencing changes in the level of its profit before interest as a result of changes in turnover or

The most common critical point for recognizing revenue, for a typical manuf...

for a typical manufacturing company, the most common critical point for recognizing revenue is the date a an order is recieved b. production is completed c the product is delievere

What do you mean by suspense account, Q. What do you mean by suspense accou...

Q. What do you mean by suspense account? How are errors in accounting classified? Suspense account: A suspense account is an account, which is opened when the trail balance does

Using the irs amortization calculate the interest, Interest on Zeroes: ...

Interest on Zeroes: Tesla Corporation needs to raise funds to finance a plant expansion, and it has decided to issue 25-year zero coupon bonds to raise the money. The required

Report to stockholders of a company, Q. Report to stockholders of a company...

Q. Report to stockholders of a company? Annual Report - Report to stockholders of a company that includes company's annual,audited BALANCE SHEET and related statements of earni

Binary coded decimal, Binary Coded Decimal BCD stands for Binary Coded ...

Binary Coded Decimal BCD stands for Binary Coded Decimal. The information given to the computer is stored temporarily before it is processed.  Consider a number 827. The bin

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd