Economics Time Value Of Money Questions Long
The formula for calculating the future value of an annuity payment is as follows:
Future Value (FV) = P * [(1 + r)^n - 1] / r
Where:
- FV represents the future value of the annuity payment.
- P denotes the periodic payment or cash flow received at regular intervals.
- r represents the interest rate per period.
- n represents the number of periods.
This formula assumes that the annuity payments are made at the end of each period and that the interest is compounded at the same frequency as the annuity payments.