<!-- WP QUADS Content Ad Plugin v. 2.0.95 -->
<div class="quads-location quads-ad1" id="quads-ad1" style="float:left;margin:0px 0px 0px 0;">

</div>
<p align="justify">Calculation of annuities is an important topic of basic finance and requires simple calculation to find the present or future value of any amount. one can value an annuity with two ways. It is therefore a limited count of cash flows, the slow or first way is to separately value each cash flow and add their present values. The quick or second way used the following formula to value the annuities. </p>
<p align="justify">
General formula for annuity that pays C$ in a year for every t year is:</p>
<p align="justify">&#160;</p>
<p align="justify"><a href="http://mba-lectures.com/wp-content/uploads/2010/12/image4.png"><img style="border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px" title="image" border="0" alt="image" src="http://mba-lectures.com/wp-content/uploads/2010/12/image_thumb4.png" width="400" height="26" /></a> </p>
<p align="justify">&#160;</p>
<p align="justify">This expression is generally known as the annuity factor for t year, and it shows present value of time t year annuity of $1 per year. Second way to write its annuity value is:</p>
<!-- WP QUADS Content Ad Plugin v. 2.0.95 -->
<div class="quads-location quads-ad2" id="quads-ad2" style="float:none;margin:0px 0 0px 0;text-align:center;">

</div>

<p align="justify">
Present value of t year annuity = payment&#160; multiply by annuity factor</p>
<p align="justify">
For example Bobby travelers offer an &#8220;easy payment&#8221; schedule of $8000 a year at the end of each year for the next 3 years. Lets first calculate the annuity with the slow way, interest rate is 10%. Present value of 3 payments is </p>
<p align="justify">&#160;</p>
<p align="justify"><a href="http://mba-lectures.com/wp-content/uploads/2010/12/image5.png"><img style="border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px" title="image" border="0" alt="image" src="http://mba-lectures.com/wp-content/uploads/2010/12/image_thumb5.png" width="400" height="205" /></a> </p>
<p align="justify">&#160;</p>
<p> The above figure shows present value of each cash flow calculated and summed. But the same calculation could be done with the help of Annuity formula which is much quicker. The calculation with the help of annuity formula is given below:</p>
<p> &#160;</p>
<p> <a href="http://mba-lectures.com/wp-content/uploads/2010/12/image6.png"><img style="border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px" title="image" border="0" alt="image" src="http://mba-lectures.com/wp-content/uploads/2010/12/image_thumb6.png" width="400" height="67" /></a> 
<!-- WP QUADS Content Ad Plugin v. 2.0.95 -->
<div class="quads-location quads-ad3" id="quads-ad3" style="float:none;margin:0px;">

</div>


Page: 1 2
Microsoft Corporation also known as MS is one of the biggest multinational technology-based company in…
The article is based upon in-depth analysis of Fast Food Industry of Australian Region with…
The paper presents detailed overview about the Apple Inc. analysis on the parameters set by…
The purpose of this research paper is to develop a marketing plan for the Thomson…
1. As applicable to other department managers, a human resources manager invigilates the departments and…
The purpose of the present article is to formulate a work allocation flow chart of…
View Comments
this site is very helpfull