future value of an ordinary simple annuity参考.ppt

Chapter 10 Ordinary Annuities: Future Value And Present value 10.2 future value of an ordinary simple annuity The future value of an annuity is the sum of the future values of all of the payments (evaluated at the end of the last payment interval) The future value of a four-payment annuity Future value of an ordinary simple annuity: R=the regular payments p=interest rate per payment interval Sn=future value of an n-payment ordinary simple annuity n=the number of payment interval Future Value Using The Financial Calculator Functions The correspondence between the key labels and the algebraic variables in formula (10-1) is =n, the number of annuity payments = p or i2, the interest rate per payment interval (in percent) =R, the size of the annuity payment =Sn, the future value of the annuity To calculate the FV of an annuity, enter the known values for n, p, and R into the  and memories. Application Of The Future Value Of An Annuity Most applications of the future value calculation fall into two categories: ? Determining the total amount of principal plus interest that will be accumulated at the end of a series of equal regular investments earning p per payment interval. ?Determining the single payment at the end of an annuity that is economically equivalent to the annuity. The value that should be used for p in this case is the time valued of money. In other words, p is the interest rate (per payment interval) at which money could be invested. Example Heina has been contributing $300 at the end of each month for the past 15 months to a savings plan that earns 6% compounded monthly.What amount will he have 1 year from now if he continues with the plan? Solution:  Given R=$300, n=27 ,