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Objectives
c
where p =(1+i) - 1
Finding PV of an Annuity
Calculating PV
Using a Preprogrammed
Calculator to Find PV or FV of
an Ordinary General Annuity
Finding PMT When the Future
Value Is Known
n
FVnc = PMT (1 + p) - 1
p
PMT = FVnc p
n
(1+p) -1
Find PMT Using the Electronic
Calculator
When using a preprogrammed finance
calculator, you can find PMT by entering 5
known values (FV, N, I/Y, P/Y, C/Y) and
pressing CPT PMT.
PMT = PVncp
-n
1 (1+p)
Finding i
Summary
In an ordinary general annuity, the payment
interval and interest conversion interval do
not coincide.(i.e. General)
It is necessary to calculate an equivalent
rate of interest so that the payment interval
and interest conversion interval do coincide.