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A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-1}?
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A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-...
Understanding Future Value of Annuity
To calculate the Future Value (FV) of an annuity, we use the formula:
FV = A * ((1 + i)^n - 1) / i
Where:
- A = Payment amount per period
- i = Interest rate per period
- n = Total number of periods
In this case:
- A = 100
- n = 10
- i = 5% (0.05)
Step-by-Step Calculation
1. Convert Interest Rate
- i = 5% = 0.05
2. Calculate (1 + i)^n
- (1 + 0.05)^10 = (1.05)^10 ≈ 1.62889
3. Subtract 1 from the Result
- (1.62889 - 1) ≈ 0.62889
4. Divide by Interest Rate
- 0.62889 / 0.05 = 12.5778
5. Multiply by Payment Amount
- FV = 100 * 12.5778 ≈ 1257.78
Final Result
The Future Value of the annuity, given the parameters, is approximately 1257.78.
Conclusion
This calculation demonstrates how regular payments grow over time due to compound interest. Understanding this concept is crucial for financial planning and investment strategies.
For more comprehensive learning, consider exploring resources available on EduRev.
To calculate the Future Value (FV) of an annuity, we use the formula:
FV = A * ((1 + i)^n - 1) / i
Where:
- A = Payment amount per period
- i = Interest rate per period
- n = Total number of periods
In this case:
- A = 100
- n = 10
- i = 5% (0.05)
Step-by-Step Calculation
1. Convert Interest Rate
- i = 5% = 0.05
2. Calculate (1 + i)^n
- (1 + 0.05)^10 = (1.05)^10 ≈ 1.62889
3. Subtract 1 from the Result
- (1.62889 - 1) ≈ 0.62889
4. Divide by Interest Rate
- 0.62889 / 0.05 = 12.5778
5. Multiply by Payment Amount
- FV = 100 * 12.5778 ≈ 1257.78
Final Result
The Future Value of the annuity, given the parameters, is approximately 1257.78.
Conclusion
This calculation demonstrates how regular payments grow over time due to compound interest. Understanding this concept is crucial for financial planning and investment strategies.
For more comprehensive learning, consider exploring resources available on EduRev.
Community Answer
A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-...
Answer is 1258 please get me solutions
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A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-1}?
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A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-1}? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-1}? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-1}?.
A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-1}? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-1}? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A=100 n=10 i=5% find the FV of annuity Using the formula FV=a/{1 i)^n-1}?.
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