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To account for this time advantage, the formula for the future value of an annuity due is: FVAnnuity Due = C x [((1 + i)^n – 1) / i] x (1 + i) where:
Actuarial notation is a shorthand method to allow actuaries to record mathematical formulas that deal with interest rates and life tables.. Traditional notation uses a halo system, where symbols are placed as superscript or subscript before or after the main letter.
The formula for this method divides the retirement account balance by a number called the annuity factor. The annuity factor is calculated using some specific information, such as life expectancy ...
In Excel, the PV and FV functions take on optional fifth argument which selects from annuity-immediate or annuity-due. An annuity-due with n payments is the sum of one annuity payment now and an ordinary annuity with one payment less, and also equal, with a time shift, to an ordinary annuity. Thus we have:
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Using an interest rate i, the capital recovery factor is: = (+) (+) where is the number of annuities received. [1] This is related to the annuity formula, which gives the present value in terms of the annuity, the interest rate, and the number of annuities.