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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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How do you compute the future value of an ordinary annuity?

To determine

Show the formula for the computation of future value of an ordinary annuity of $1.

Explanation

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date.

The future value of an ordinary annuity of $1 express the number of dollar will accrue from a sequence of end of the period cash flow that occurs over a period of time at a stated rate of interest.

Future value of an ordinary annuity can be computed from the following formula:

FVO=C×[(1+i)n-1i]

(or),

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