Asked by April
In the future value annuity table at any interest rate for one year, why is the future value interest factor of this annuity equal to 1.00?
Answers
Answered by
Reiny
the values in your tables are generated by the formula
FV = $1 ( (1+i)^n - 1)/i
if n = 1 , that becomes
FV = 1( 1+i)^1 - 1)/i
= 1( 1+i - 1)/i
= i/i
= 1
FV = $1 ( (1+i)^n - 1)/i
if n = 1 , that becomes
FV = 1( 1+i)^1 - 1)/i
= 1( 1+i - 1)/i
= i/i
= 1
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