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The future value of a 5-year ordinary annuity can be calculated using the formula: ( FV = P \times \frac{(1 + r)^n - 1}{r} ), where ( P ) is the payment per period, ( r ) is the interest rate per period, and ( n ) is the number of periods. This formula accounts for the compounding interest on each payment made at the end of each period. To find the specific future value, you would need to know the payment amount and the interest rate.
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What is the formula for future value of ordinary annuity?
FVoa = PMT [((1 + i)n - 1) / i]FVoa = Future Value of an Ordinary AnnuityPMT = Amount of each paymenti = Interest Rate Per Periodn = Number of Periods
What is the Present Value of an ordinary annuity with five annual payments of 3000 each if the appropriate interest rate is 4.00 percent?
To calculate the Present Value (PV) of an ordinary annuity, you can use the formula: [ PV = P \times \frac{1 - (1 + r)^{-n}}{r} ] where ( P ) is the annual payment (3000), ( r ) is the interest rate (0.04), and ( n ) is the number of payments (5). Substituting these values into the formula gives: [ PV = 3000 \times \frac{1 - (1 + 0.04)^{-5}}{0.04} \approx 3000 \times 4.4518 \approx 13355.39 ] Thus, the Present Value of the ordinary annuity is approximately $13,355.39.
Is the present value factor the exponent of the future value factor?
The present value factor is the exponent of the future value factor. this is the relationship between Present Value and Future Value.
What is the present value of an annuity due of 1000 per year for 12 years at 5 percent interest?
To calculate the present value of an annuity due, you can use the formula: ( PV = P \times \left(1 + r\right) \times \frac{1 - (1 + r)^{-n}}{r} ), where ( P ) is the payment per period, ( r ) is the interest rate, and ( n ) is the number of periods. Substituting in the values ( P = 1000 ), ( r = 0.05 ), and ( n = 12 ), the present value of the annuity due is approximately $11,021.88. This accounts for the fact that payments are made at the beginning of each period.
If the interest rate is 0 the future value interest factor equals what?
If the interest rate is 0, the future value interest factor equals 1. This is because, without interest, any amount of money will remain the same over time; thus, the future value of any present amount will be equal to itself. Therefore, regardless of the time period, the future value remains unchanged when the interest rate is 0%.
What is the future value of a 5year ordinary annuity with annual payments of 200 evaluated at 15 percent?
Fv = $200(fvifa15%,5) = $200(6.7424) = $1,348.48.
The factor for the future value of an annuity due is found by multiplying the ordinary annuity table value by one minus the interest rate?
The statement regarding the factor for the future value of an annuity due is incorrect. The correct method for calculating the future value of an annuity due involves taking the future value factor from the ordinary annuity table and multiplying it by (1 + interest rate). This adjustment accounts for the fact that payments in an annuity due are made at the beginning of each period, leading to additional interest accumulation compared to an ordinary annuity.
The future value of an annuity due is always greater than the future value of an otherwise identical ordinary annuity True or false?
true
What is the difference between ordinary annuity and annuity due?
In an ordinary annuity, the payments are fed into the investment at the END of the year. In an annuity due, the payments are made at the BEGINNING of the year. Therefore, with an annuity due, each annuity payment accumulates an extra year of interest. This means that the future value of an annuity due is always greater than the future value of an ordinary annuity.When computing present value, each payment in an annuity due is discounted for one less year (because one of the payments is not made in the future- it is made at the beginning of this year and is already in terms of present dollars). This will result in a larger present value for an annuity due than for an ordinary annuity, as well.
Differentiate between ordinary annuity and annuity due?
In an ordinary annuity, the annuity payments are fed into the investment at the END of the year. In an annuity due, the payments are made at the BEGINNING of the year. Therefore, with an annuity due, each annuity payment accumulates an extra year of interest. This means that the future value of an annuity due is always greater than the future value of an ordinary annuity.When computing present value, each payment in an annuity due is discounted for one less year (because one of the payments is not made in the future- it is made at the beginning of this year and is already in terms of present dollars). This will result in a larger present value for an annuity due than for an ordinary annuity, as well.
What is the formula for future value of ordinary annuity?
FVoa = PMT [((1 + i)n - 1) / i]FVoa = Future Value of an Ordinary AnnuityPMT = Amount of each paymenti = Interest Rate Per Periodn = Number of Periods
When there is only one compounding period in a ordinary annuity the table factor for future value is always 1?
True
What happens to the present value of an annuity if the future value of an annuity is increased?
It increases
What is the Difference between the future value of annuity and sinking fund?
future value of an annuity is a reciprocal of a sinking fund
How do you define the value of value?
I need a answer how do you know when to use future value or present value and future value of a annuity and present value of annuity Please help
What is the future value on an ordinary annuity of 12000 dollars per year for three years at 9 percent interest compounded annually?
39,337.20
What is an annuity with payments made at the end of each period?
An annuity with payments made at the end of each period is known as an ordinary annuity. In this type of financial arrangement, equal payments are made at the conclusion of each specified time interval, such as monthly or annually. This structure is commonly used in loans, mortgages, and retirement plans, where the timing of the payments affects the present value and future value calculations. The ordinary annuity contrasts with an annuity due, where payments are made at the beginning of each period.
