Future Value of an Annuity (aka Ordinary Annuity)

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Future Value of an Annuity (aka Ordinary Annuity)

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Күн бұрын

In this video, I explain how you can calculate the Future Value of an Annuity using an example. This type of calculation is particularly important to evaluate situations where you are planning to make recurring deposits in order to save up a certain amount of money in the future (e.g. saving up for retirement, kids' education, etc.).
ABOUT ME:
My name is Atif Ikram. I am a member of the finance faculty at Arizona State University's W.P. Carey School of Business (wpcarey.asu.ed.... I love to teach! Over the past few years, I have taught a variety of economics and finance courses to undergraduate and graduate students at Rutgers University, Wayne State University, and Lahore University of Management Sciences (LUMS, Pakistan). Presently I teach advance corporate finance courses at ASU.
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Пікірлер: 7

@Cookie-3473 5 ай бұрын

Thank you sir

@haileyl7694 6 ай бұрын

Thank you.

@magedx7059 10 ай бұрын

Thank you

@Yumamafresh Жыл бұрын

Thank you so much in this teaching style/methodology that we actually learn without sales pitch.

@josemastery955 2 жыл бұрын

Good explanation sir🙏🙏

@roshan8329 10 ай бұрын

Hey, I have a question. What would be the amount at the end of 5 years in case the interest is compounding semi-annually?

@professorikram 10 ай бұрын

Hey Roshan. If interest is compounded semi annually, then you first need to determine the semi annual (ie six month interest rate). If the annual rate is 4%, then semi annual would be 4%/2 = 2%. And in 5 years, it would have compounded 10 times, ie once every 6 months, so twice a year and 5x2=10 times in 10 years. So use these as your values in the formula, 2% for interest rate and 10 for the number of time periods. In general, if interest is compounded “m” times a year (eg m=2 if interest is compounded semi annually, m = 4 if compounded quarterly), divide the ANNUAL interest rate by “m” and multiply the number of YEARS by “m” in the formula. Hope this helps! Thanks for asking.