Present value of an annuity - NEED HELP !! (1 Viewer)

[p3rf3ction]

Im really struggling on distinguishing which formula to use whether its the big one or the n= a/(1+r)^n.
Please help

 

[Drongoski]

present value = a/(1+r)^n

 

[p3rf3ction]

i just wrote that...theres two formulas, i dont know which one to use for diff questions.

 

[T0m0h4wk]

the big one: N=((m(1+r)^n)-1)/r(1+r)^n is used to find the future value when the question gives you the contributions but not the future value.
if the future value is given but not the contribution use N=a/(1+r)^n

m is the symbol for contribution from future value formula and a is future value so use this to remember it

 

[cutemouse]

Do you understand the idea behind annuities?

Because then memorising wouldn't be necessary. Perhaps a cashflow diagram would help...

Given that it's general maths I don't think they would ask too hard questions involving annuities...