11.6: Future and Present Annuity Factors- Mathematical Formulas
Key : PVAF – Present Value Annuity Factor. FVAF – Future Value Annuity Factor.
Example 1 : R = 0.10 ; N = 5 ; P = 2
Solution 1 : [(1) ÷ (0.10/2)] – [(1) ÷ (0.10/2) (1 + 0.10/2) 5 × 2 ] = 7.72173493
*This multiplier should be the same as in your Present Value Annuity Table.
Example 2 : R = 0.095 ; N = 5 ; P = 2
Solution 2 : [(1) ÷ (0.095 / 2 )] – [(1) ÷ ( 0.095 / 2 ) (1 + 0.095 / 2 ) 5 × 2 ] = Fill in your answer
*This multiplier is not in your Present Value Annuity Table. Compare the two solutions.
Example 3 : R = 0.10; N = 5; P = 2
S olution 3 : [(1 + 0.10/2) 5 x 2 – 1] ÷ 0.10/2 = 12.57789253554883
*This multiplier should be the same as in your Future Value Annuity Table.
Example 4 : R = 0.10 12 ; N = 5; P = 2
Solution 4 : [(1 + 0.1012/2) 5 x 2 – 1] ÷ 0.1012/2 = Fill in your answer
*This multiplier is not in your Future Value Annuity Table. Compare the two solutions .