Chapter 11: Symbols and Formulas Introduced

The Formulas You Need to Know

$C / Y$ = compounding per year or compounding frequency

$F V_{D u e}$ = future value of annuity due

$F V_{O r d}$ = future value of an ordinary annuity

$I / Y$ = nominal interest rate

$i$ = periodic interest rate

$i$ = number of annuity payments

$P / Y$ = payments per year or payment frequency

$P M T$ = annuity payment amount

$P V_{D u e}$ = present value of annuity due

$P V_{O r d}$ = present value of ordinary annuity

$Y e a r s$ = the term of the annuity

Number of Annuity Payments:

$n = P / Y \times (Number of Years)$

Ordinary Annuity Future Value:

$F V_{O R D} = P M T [\frac{(1 + i)^{n} - 1}{i}]$

Annuity Due Future Value:

$F V_{D U E} = P M T [\frac{(1 + i)^{n} - 1}{i}] \times (1 + i)$

Ordinary Annuity Present Value:

$P V_{O R D} = P M T [\frac{1 - (1 + i)^{- n}}{i}]$

Annuity Due Present Value:

$P V_{D U E} = P M T [\frac{1 - (1 + i)^{- n}}{i}] \times (1 + i)$

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Business Math: A Step-by-Step Handbook Abridged Copyright © 2022 by Sanja Krajisnik; Carol Leppinen; and Jelena Loncar-Vines is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.