annunities! (1 Viewer)

[sc81290]

hey...im having trouble relating the FV and PV formulas to the Q. i no what the formulas are but when reading the Q i am confused to which formula i am meant 2 use and its really frustrating as i have written them out so many times and done so many examples but still im not confident in which one 2 use...any helpful suggestions?

 

[pLuvia]

If a question asks for the accumulated value of an annuity you use the FV formula, if it asks for the present value then use the PV formula.

Sometimes they may ask a question like this: It is time 0 now find the value at time 5, then you use FV formula
Or if they ask find the repayments to a loan, use PV

 

[sasa-o8]

To the OP, I'm in the exact same situation as you.

pLuvia, thankyou! You cleared things up a bit. I shall practice more questions to get the hang of it more.

 

[PC]

Loans are ALWAYS present value questions. The amount borrowed is the present value, and you always use the big formula.

Some questions will say something like "what lump sum invested now". They're present value questions. The formula you use will depend on the information given in the question.