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Module 8 Formulas

The document provides formulas for calculating the present and future values of ordinary annuities and annuities due, including deferred annuities and perpetuities. It outlines various equations for determining periodic payments and the total number of conversion periods. Key variables include payment amount (Pmt), interest rate (i), and the number of periods (n).

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nhesleygammad09
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5 views2 pages

Module 8 Formulas

The document provides formulas for calculating the present and future values of ordinary annuities and annuities due, including deferred annuities and perpetuities. It outlines various equations for determining periodic payments and the total number of conversion periods. Key variables include payment amount (Pmt), interest rate (i), and the number of periods (n).

Uploaded by

nhesleygammad09
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

ORDINARY ANNUITY ANNUITY DUE

Pmt [ 1 – ( 1+i )−n ] [1 – (1+i)¿¿−n](1+i)


PVOA = Present Value of Ordinary Annuity PVAD = Pmt
i
¿ Present Value of Annuity Due
i

Pmt [ ( 1+i ) – 1 ]
n PVAD (1+i )
FVOA = Future Value of Ordinary Pmt =
i [ 1 – ( 1+i )−n ] (1+i )

CV = DP + PVOA
Annuity
Pmt [ ( 1+i )n – 1 ] ( 1+ i )
FVAD = Future Value of Annuity
i
Cash Value Due
PVOA ( i ) FVAD ( 1+i )
Pmt = Pmt =
[ 1 – ( 1+i )−n ] [ ( 1+ i )n – 1 ] ( 1+i )
FVOA ( i )
Pmt =
[ ( 1+ i )n – 1 ]
PERIODIC PAYMENT
log Pmt – log ( Pmt – ( PVOA ) i )
t= m log ( 1+i ) FVAD ( i )
Pmt = ¿¿
[ log ( Pmt + FVOAi ) ] – log Pmt
t= m log ( 1+i ) Pmt =
PVAD ( i )
( 1+ i ) [ 1 – ( 1+i )−n ]
Pmt { [ ( 1+ i ) – 1] – 1}
n +1

FVOAL =
i

CA = PVOA
TERM OF ANNUITY DUE
( 1+i )n

CP = FVOA – FVOAL n=
{ log ( ( FVAD+PmtPmt )( i ) +1) −1
log ( 1+i )
}
{ }
n = total number of conversion periods
n=1– (
log 1−
( PVAD−Pmt ) ( i )
Pmt ) CV = Cash Value
DP = Down Payment
log ( 1+ i ) m = conversion period
d = number of deferred period (period of deferment)

DEFERRED ANNUITY
Pmt [ ( 1+i )n – 1 ]
FVD = Future Value of Deferred
i
Annuity

PVD = Pmt { }
1 – ( 1+i )
– ( d +n)
¿¿¿ i –
[ 1 – (1+i ) )
−d

PVD
Pmt = [ 1 – ( 1+i ) −( d +n)
] – [ 1 – ( 1+i )−d ]
i i

n=
log
{[ Pmt
Pmt – PVD ( i )( 1+i )d ] }
log (1+i )

Pmt
PVO = i Present Value of Simple
Ordinary Perpetuity

Pmt
Pmt
PVA = i + Present Value of
Simple Annuity Due

Pmt = Periodic Payment of Ordinary Annuity


i = periodic rate

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