751 using equation 414 the 1000 deposit 5751 results

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Unformatted text preview: the calculator inputs shown at the left, you will find the future value of the ordinary annuity to be $5,750.74, a slightly more precise answer than that found using the table. 8. A mathematical expression that can be applied to calculate the future value interest factor for an ordinary annuity more efficiently is FVIFAi,n 1 i [(1 i)n 1] (4.13a) The use of this expression is especially attractive in the absence of the appropriate financial tables and of any financial calculator or personal computer and spreadsheet. 146 PART 2 Important Financial Concepts Spreadsheet Use The future value of the ordinary annuity also can be calculated as shown on the following Excel spreadsheet. Finding the Present Value of an Ordinary Annuity Quite often in finance, there is a need to find the present value of a stream of cash flows to be received in future periods. An annuity is, of course, a stream of equal periodic cash flows. (We’ll explore the case of mixed streams of cash flows in a later section.) The method for finding the present value of an ordinary a...
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