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# Time Value of Annuity

Can someone please explain to me this formula in detail. I just can't figure how dividing by $$r$$ leads to converting the numerator to Future value of an annuity?

What I understand from the numerator is it basically removes the principal amount and keeps the interest from compounding a single cash flow after subtracting 1. Below is the formula:

FVAn = A $$\frac {[(1+r)^n-1]}{r}$$

Where, FVAn = Future Value of an Annuity A = Annuity
r = Rate of Interest
n = number of years

Note by Namit Jain
11 months, 3 weeks ago

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Did you look at the time value of money? It lists out the present value of an annuity.

Staff - 11 months, 2 weeks ago