How do you find the PV factor of an ordinary annuity?
If you know an annuity is discounted at 8% per period and there are 10 periods, look on the PVOA Table for the intersection of i = 8% and n = 10. You will find the factor 6.710. Once you know the factor, simply multiply it by the amount of the recurring payment; the result is the present value of the ordinary annuity.
How do you use the present value of an ordinary annuity table?
Find both of them for your annuity on the table, and then find the cell where they intersect. Multiply the number in that cell by the amount of money you get each period. That number is the present value of your annuity.
What is the future value of an annuity of $1?
Rate Table For the Future Value of an Ordinary Annuity of 1
| n | 1% | 10% |
|---|---|---|
| 1 | 1.0000 | 1.0000 |
| 2 | 2.0100 | 2.1000 |
| 3 | 3.0301 | 3.3100 |
| 4 | 4.0604 | 4.6410 |
What formula is used to determine the present value factor for an annuity of $1?
The formula for determining the present value of an annuity is PV = dollar amount of an individual annuity payment multiplied by P = PMT * [1 – [ (1 / 1+r)^n] / r] where: P = Present value of your annuity stream. PMT = Dollar amount of each payment. r = Discount or interest rate.
How do you calculate the present value of 1?
In order to find the PV, you must know the FV, i, and n. When considering a single-period investment, n is, by definition, one. That means that the PV is simply FV divided by 1+i. There is a cost to not having the money for one year, which is what the interest rate represents.
What is the PV of an ordinary annuity with 10 payments of 2700?
Therefore,The Present Value of the given payments should be $20,314.144.
What is the future value of ordinary annuity?
Future value is the value of a sum of cash to be paid on a specific date in the future. Therefore, the formula for the future value of an ordinary annuity refers to the value on a specific future date of a series of periodic payments, where each payment is made at the end of a period.
What is annuity due and ordinary annuity?
Annuity due is an annuity whose payment is due immediately at the beginning of each period. Annuity due can be contrasted with an ordinary annuity where payments are made at the end of each period. A common example of an annuity due payment is rent paid at the beginning of each month.