Formula of present value coefficient of annuity
Formula of present value coefficient of annuity: PVA/A =1/I-1/[I (1+I) n].
Where I stands for rate of return, number of n periods, PVA stands for present value, and A stands for annuity.
For example, if you deposit 1200 yuan in the bank at the end of each year for five consecutive years, the annual interest rate is 10%, and the final value of the funds you deposit in these five years =1200 * (1+10%) 4+1200.
The present value of your deposit in these five years =1200/(1+10%)+1200/(1+10%) 2+10.
What is the present value of the annuity?
The present value of annuity refers to the sum of the present value converted from the income at the end of each period or the equivalent amount paid to the beginning of the first period at the same time interval within a certain period.
Difference between present value and final value of annuity
1, different concepts.
The present value of annuity is the present value of the equivalent face value of these receipts and payments to the present when the future principal and interest rate and the number of interest periods n of the same amount of receipts and payments are known, taking into account the time value of money.
The final value of an annuity is the equivalent face value of these income and expenses to the maturity date when the present value, interest rate and interest period n are known, taking into account the time value of money.
2. Different calculation methods
The formula for calculating the final value of annuity is f = a * (F/A, I, n) = a * (1+I) n- 1/I, where (F/A, I, n) is called.
Final value coefficient of annuity
The formula for calculating the present value of annuity is p = a * (P/A, I, n) = a * [1-(1+I)-n]/I, where (P/A, I, n) is called
Present value coefficient of annuity
In the formula, n- 1 and -n both represent powers.
3. Different procedures
There are many kinds of annuities: ordinary annuity, early payment annuities, deferred annuities and perpetual annuities. The present value of ordinary annuity refers to the sum of the present value of compound interest of income and expenditure at the end of each period.
The final value of ordinary annuity refers to the sum of the final compound interest value of income and expenditure at the end of each period in a certain period. Simply put, the present value is the money borrowed from the bank now, which will be returned in the form of an annuity every year. The final value is to give the annuity to the bank every year now and use it later.
What is the reciprocal of ordinary annuity's present value coefficient?
The reciprocal of ordinary annuity's final coefficient is called sinking fund coefficient. Ordinary annuity's final coefficient and sinking fund coefficient are reciprocal; Ordinary annuity's present value coefficient and capital recovery coefficient are reciprocal; The compound interest final value coefficient and compound interest present value coefficient are reciprocal. Sinking fund, also known as sinking fund
Debt reduction fund