Annuities (Future Values)
3 important questions on Annuities (Future Values)
FV of an Annuity- Ordinary & Due
-Ordinary: Rent occurs at the end of period | No interest in the 1st period
-Due: Rent occurs at beginning of period | Interest in the 1st period
-Due: Rent occurs at beginning of period | Interest in the 1st period
FV of an Ordinary Annuity
FV of an Ordinary Annuity= R*(FVF-OA n,i) || =R*{((1+i)^n-1)/i}
-Rent occrs at end of period causing no interest in the 1st period
- R=Periodic rent
- i=rate of interest per compounding period
- n=number of compounding periods
-Rent occrs at end of period causing no interest in the 1st period
Differences of the FV of Annuities (Ordinary and Due) looks like
The differences of interest for beginning periods
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