Question

Given an end of period annuity, you can find a future sum of money.

Which of the following periodic compounding functional notation is correct?

A. (F/A, i%, n)

B. (A/F, i%, n)

C. (F/A, r%, n)

Answer 1

The payment series referred to (ie., end of the period payments) is an ordinary annuity (uniform series payments).

The commonly used functional notation for future value of ordinary annuity is (F/A,i%,n) given as option A. Here 'i%' refers to interest rate anf 'n', the number of payments

Option B refers to the sinking fund factor (table to find out amount of annuity.payments from future sum rewquired)

Option C also refers to the future value of annuity, 'r%' denoting 'Rate of interest'. But this notation is only very rarely used.