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

What is the approximate tax rate, 1. From your review of note 3.7, how does...

1. From your review of note 3.7, how does the company determine whether a sale has occurred? 2. Using the consolidated income statement and consolidated statement of financial p

Deferred tax-income tax-financial statement, Deferred tax A company may e...

Deferred tax A company may enter into transactions in the current financial period that may result in the firm either paying or saving some tax in the future. The tax that may be

Home work, 1. The acceptance of a capital budgeting project is usually eval...

1. The acceptance of a capital budgeting project is usually evaluated on its own merits. That is, capital budgeting decisions are treated separately from capital structure decision

Bond''s yield to maturity, A 15-year, 14% semiannual coupon bond with a par...

A 15-year, 14% semiannual coupon bond with a par value of $1,000 may be known as in 4 years at a call price of $1,075. The bond sells for $1,050. (Suppose that the bond has just be

Finacial management, There are two projects A and B. The initial capital ou...

There are two projects A and B. The initial capital outlay of A and B are Rs.1,35,000 and Rs.2,40,000 respectively. There will be no scrap value at the end of the life of both the

Amortization of patents for year 2010, Ely purchased a patent (with a remai...

Ely purchased a patent (with a remaining legal life of ten years) from Backo on January 1, 2010 for $300,000. Ely expected to use the patent for five years. The carrying value on B

Show the nature of business operations, Q. Show the nature of business oper...

Q. Show the nature of business operations? The nature of business operations that influences the proportion of fixed costs to total costs. Capital intensive business operations

What do you mean by grant date in stock option, Q. What do you mean by Gran...

Q. What do you mean by Grant date in Stock Option? Grant date - The date at which an employee and an employer reach a mutual understanding of key terms and conditions of a shar

Virtual output queuing, Please prove that the maximum throughput of input q...

Please prove that the maximum throughput of input queued switch is 0.586 when switch size N approaches infinity. Assume the incoming traffic is uniformly distributed. Please dem

Find out the current dividend per share, Find out the Current dividend per ...

Find out the Current dividend per share:   Data Stock price = $ 65 Return = 11% Dividend Yield =  11/ 2 = 5.5 % (given) Formula: Dividend in one year = divid

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