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

Calculate the expected return, A portfolio consists of the following three ...

A portfolio consists of the following three assets A, B and C. (a) Assuming a risk-free rate of 5.85 per cent and an expected return on the market of 13.60 per cent, calculate t

Determine the accounting aspects of business, Determine the accounting aspe...

Determine the accounting aspects of business Accounting scandals can have a profound effect on all those connected with business. Enron scandal, for instance, ultimately led t

Compare the alternatives on a total-annual-cost , The Rohr Company's old eq...

The Rohr Company's old equipment for making subassemblies is worn out. The company is considering two alternatives: a) Completely replacing the old equipment with new equipment

Illustration of marked up by an additional amount, Illustration of marked u...

Illustration of marked up by an additional amount E Limited sent goods to its branch in Thika invoiced at selling price, which was cost plus 505 of cost.  On 1st July 20X2, the

Distribution to a beneficiary-trusts laws and accounts, Distribution to a b...

Distribution to a beneficiary Before distribution to a beneficiary, the investments will be re-valued and the profits or losses divided between the beneficiaries as follows:-

How many full-time members are on the pcaob, How many full-time members are...

How many full-time members are on the Public Company Accounting Oversight Board (PCAOB)?

Accounts, the salaries paid in 2004 is rs. 500000 salaries outstanding is r...

the salaries paid in 2004 is rs. 500000 salaries outstanding is rs.20000 salaries paid in advance for 2004 is rs 30000 what is the actual salary expenditure for 2004?

Absorption costing, Absorption costing is a cost accounting method that ...

Absorption costing is a cost accounting method that tries to charge all direct costs and all production costs of an organization to specific units of pr

Prepare income statement and analysis of retained earnings, You are prepari...

You are preparing and income statement and analysis of retained earnings for Pacioli Wholesale Corporation for the years ended June 30, 2011 and 2012 based on the following informa

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