Waste less time on Facebook — follow Brilliant.

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

No vote yet
1 vote


Sort by:

Top Newest

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

Calvin Lin Staff - 11 months, 2 weeks ago

Log in to reply


Problem Loading...

Note Loading...

Set Loading...