Could anyone who is good at finance help me? I am currently studying finance and I am in the time value of money chapter. In Barron's Finance, there is no mention of annuity due or ordinary annuity, just annuity. I know what annuity due and ordinary annuity mean, but I need to know how to calculate each. Barron's says that the formula for the future value of an annuity is FV = P*{[((1+R)^N)-1]/R} (where P is payment per period, R is interest rate, and N is number of periods) and according to what it says about an annuity, it is an ordinary annuity.
A Business Math textbook that I studied a few years ago says that the formula for the future value of an annuity due is FV = P*{[((1+R)^N)-1]/R} and an ordinary annuity is FV = P*{[1-(1+R)^-N]/R}
So this book says that the formula Barron's gives is for an annuity due.
This is making me confused. Which formula is the correct one for each type of annuity and how can one find the present/future values of an annuity due using a regular annuity table?
A Business Math textbook that I studied a few years ago says that the formula for the future value of an annuity due is FV = P*{[((1+R)^N)-1]/R} and an ordinary annuity is FV = P*{[1-(1+R)^-N]/R}
So this book says that the formula Barron's gives is for an annuity due.
This is making me confused. Which formula is the correct one for each type of annuity and how can one find the present/future values of an annuity due using a regular annuity table?
[SIZE="1"]BSBA in Accounting at TESC - Done! :hurray:
Started June 2009 with zero credits, now have 133!
CLEP:
English Literature - 67, Chemistry - 60, Microeconomics - 69, Macroeconomics - 77, U.S. History I - 68, U.S. History II - 64, American Government - 64, Humanities - 68, College Algebra - 64, English Composition - 56, Financial Accounting - 80
, Principles of Management - 74, Intro. Business Law - 73, Principles of Marketing - 79, Info. Systems & Computer Applications - 77
DSST:
Introduction to Business - 446, Human/Cultural Geography - 69, Personal Finance - 463, Principles of Supervision - 443, Organizational Behavior - 76, Human Resource Management - 77, Business Ethics and Society - 468, Principles of Finance - 471, Management Information Systems - 447, Money and Banking - 73
TECEP:
Financial Institutions and Markets, Federal Income Taxation, Strategic Management
Straighterline Course:
Business Communication
[/SIZE]
Started June 2009 with zero credits, now have 133!
CLEP:
English Literature - 67, Chemistry - 60, Microeconomics - 69, Macroeconomics - 77, U.S. History I - 68, U.S. History II - 64, American Government - 64, Humanities - 68, College Algebra - 64, English Composition - 56, Financial Accounting - 80
, Principles of Management - 74, Intro. Business Law - 73, Principles of Marketing - 79, Info. Systems & Computer Applications - 77DSST:
Introduction to Business - 446, Human/Cultural Geography - 69, Personal Finance - 463, Principles of Supervision - 443, Organizational Behavior - 76, Human Resource Management - 77, Business Ethics and Society - 468, Principles of Finance - 471, Management Information Systems - 447, Money and Banking - 73
TECEP:
Financial Institutions and Markets, Federal Income Taxation, Strategic Management
Straighterline Course:
Business Communication
[/SIZE]
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