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Time value of money calculations can be solved using a mathematical equation, a financial calculator, or a spreadsheet. Which of the following equations can be used to solve for the future value of an ordinary annuity?

PMT x {[(1+r)n – 1] / r} x (1 + r)
PMT x {[(1+r)n – 1] / r}
PMT x {1 – [1 / (1+r)n]} / r FV / (1+r)n
PMT/r

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hyderali230

Answer:

PMT x {[(1+r)n – 1] / r}

Explanation:

Ordinary annuity is the payment or receipt of fixed amount for a specified time starting at the end of the first period of payment. The basic equation used for the calculation of future value of an ordinary annuity is PMT x {[(1+r)n – 1] / r}. As compounding effect all the monthly payment is dealt only this Equation. Other equation are for perpetuity, present value of annuity and Future value of advance annuity.

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