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

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TopNewestDid you look at the time value of money? It lists out the present value of an annuity. – Calvin Lin Staff · 1 month ago

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