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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
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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