Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 25E
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An Annuity is a series of payments of fixed amounts and at fixed intervals.
These can be of two types:
- Ordinary Annuity – payment is made at the end of each period.
- Annuity Due – Payment is made at the beginning of each period
FV of an annuity due can be calculated as:
Where C denotes the fixed installment, or $ 8,000
r denotes the rate of interest, 6% annually or 0.03 compounded semi-annually
n denotes the number of installments or 6 years; 12 periods
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