NOTATION

PMT = Amount of periodic payment in an annuity j = Nominal interest rate

n = Total number of payments during the term of t = Time period or Term
an annuity FV = Accumulated value or future value of an
= Number of compounding periods during the term ordinary annuity
of a single payment in compound interest FVDue = Accumulated value or future value of an
i = Interest rate per compounding period (periodic annuity due
interest rate) PV = Discounted value or present value of an
c = Number of compounding periods per payment ordinary annuity
period PVDue = Discounted value or present value of an
i2 = Equivalent interest rate per payment period annuity due

FORMULAS

Future Value of an Ordinary Simple Annuity | 10.2(a)

(1 + 𝑖)𝑛 − 1 Number of Payments, Given 'FV' | 10.7(a)
𝐹𝑉 = 𝑃𝑀𝑇 [ ]
𝑖 𝑖 × 𝐹𝑉
𝑙𝑛 (1 + 𝑃𝑀𝑇 )
𝑛 =
𝑙𝑛(1 + 𝑖)
Present Value of an Ordinary Simple Annuity | 10.2(b)
1 − (1 + 𝑖)−𝑛
𝑃𝑉 = 𝑃𝑀𝑇 [ ] Number of Payments, Given 'PV' | 10.7(b)
𝑖
𝑖 × 𝑃𝑉
𝑙𝑛 (1 − 𝑃𝑀𝑇 )
𝑛 =−
Number of Compounding Periods per Payment Period 𝑙𝑛(1 + 𝑖)
| 10.3(a)
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑖𝑛𝑔 𝑝𝑒𝑟𝑖𝑜𝑑𝑠 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟 Time Period (in years) | 10.7(c)
𝑐 =
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟 𝑛
𝑡 =
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟
Equivalent Periodic Interest Rate per Payment Period
| 10.3(b) Number of Payments, Given 'FVDue' | 10.7(d)
𝑖2 = (1 + 𝑖)𝑐 − 1 𝑖 × 𝐹𝑉𝐷𝑢𝑒
𝑙𝑛 [1 + ]
In the case of ordinary general annuity and general 𝑃𝑀𝑇(1 + 𝑖)
𝑛 =
annuity due, substitute 'i2' for 'i' in the formulas. 𝑙𝑛(1 + 𝑖)

Future Value of a Simple Annuity Due | 10.4(a) Number of Payments, Given ‘FVDue ' | 10.7(e)
(1 + 𝑖)𝑛 − 1 𝑖 × 𝑃𝑉𝐷𝑢𝑒
𝐹𝑉𝐷𝑢𝑒 = 𝑃𝑀𝑇 [ ] (1 + 𝑖) 𝑙𝑛 [1 − ]
𝑖 𝑃𝑀𝑇(1 + 𝑖)
𝑛 =−
𝑙𝑛(1 + 𝑖)
Present Value of a Simple Annuity Due | 10.4(b)
1 − (1 + 𝑖)−𝑛
𝑃𝑉𝐷𝑢𝑒 = 𝑃𝑀𝑇 [ ] (1 + 𝑖)
𝑖