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8February 2018

Easiest and Simple Method to Calculate Present Value Annuities

Overview about annuity: It defines the different series of payments at static intervals, certain for a fixed number of years that can be for lifetimes. Payment frequency we can choose yearly, half yearly, quarterly as well as monthly.Simply it is way to secure your future by investing the money. The demand of finance has been increased in the market. Mostly students are taking admission in this field, but they are completing this subject because they are not getting suitable help to learn the basic as well as valuable information about all the topics. That’s why they are leaving this subject after one or two semesters. The demand of Finance assignment has been increased among the student. We are working as a problem solver for them. We are offering the best quality of finance assignment writing help for them at low price.

Present value annuity: According to our experts present value of annuity is a worth of a set of cash flows in the future for predefined rate of interest. We can get the all the amount in future with interest. The amount should be increased at the time of maturity according to our present cash flow. The entire financial concept defines as the time value of money, depositing money today is worth greater than receiving the same amount in the future because the money we are depositing today at  given rate of interest.

The Simple and Easiest Way to Calculate the Present Value of Annuities:

The formula behind to calculate the annuity is as follow:

P = PMT * ((1-(1/ (1+r) ^n))/r)

In this formula where:

P        defines the present value of annuity.

PMT   defines the dollar amount of each payment of the annuity.

R        defines the rate of interest (that should be fixed for long time)

N       n defines the time duration

Let’s assume Mr A has an opportunity to get the annuity that returns $ 50,000 annually for the next 25 years. In which discount rate is 6%.By using the pre-defined formula we can calculate the annuity is like:

Present value of annuity: $50000*((1-(1/1+0.06)^25))/0.06)= $639,168

The amount you will get at the time of maturity depends on the amount what you have paid annually or monthly. With the help of this formula, we can easily get the exact amount what we will get in the future. There are lots of other methods are there, our experts provide the information to the students during the sessions of finance assignment writing help.

Why the Calculation of Annuity Important for Finance Students?

This topic is very important for finance students that define the simple calculation to find the present as well as future value of amount. Students can easily get the full marks in this topic by defining the formula and calculation and also define this with the help of example.

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