Ram took a car loan of $500000 from HDBC Bank, where interest is payable at 10% for 24 months. The loan is to be repaid by making equal monthly payments of $23072.46 (calculated using the PMT function in Excel) The Schedule of payments calculated using SI formula in excel is as follow...
PMT = $1056.25 (rounded to two decimal places) As the example shows, the monthly payment for the annuity due is slightly lower ($1,056.25) compared to the ordinary annuity ($1,060.66) due to the time value of money and receiving the first payment earlier. Remember, these are just exampl...
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PMT = payment, or contribution r = rate of interest over a period of time (such as a year) n= the number of time periods (such as the number of years) Future Value of an Annuity Example A common use of future value is planning for afinancial goal, such as funding a retirement savi...