Time value of money calculations can be solved using a mathematical equation, a financial calculator, or a spreadsheet. Which of the following equations can be used to solve for the future value of an ordinary annuity?

PMT x {[ (1+r) n - 1] / r} x (1 + r)

PMT x {[ (1+r) n - 1] / r}

PMT x {1 - [1 / (1+r) n]} / r FV / (1+r) n

PMT/r

Question

Business

Alessandro Hutchinson

28 February, 09:17

Time value of money calculations can be solved using a mathematical equation, a financial calculator, or a spreadsheet. Which of the following equations can be used to solve for the future value of an ordinary annuity?

PMT x {[ (1+r) n - 1] / r} x (1 + r)

PMT x {[ (1+r) n - 1] / r}

PMT x {1 - [1 / (1+r) n]} / r FV / (1+r) n

PMT/r

+3

Answers (1)

Know the Answer?

Randall Tyler · Answer 1

PMT x {[ (1+r) n - 1] / r}

Explanation:

Ordinary annuity is the payment or receipt of fixed amount for a specified time starting at the end of the first period of payment. The basic equation used for the calculation of future value of an ordinary annuity is PMT x {[ (1+r) n - 1] / r}. As compounding effect all the monthly payment is dealt only this Equation. Other equation are for perpetuity, present value of annuity and Future value of advance annuity.