24.5.3. Future Value of an Annuity (FVA)

Try these first

1. 1.

   What does PMT stand for in relation to FVA?

   Hint

   Think about what regular contributions to savings are called.

2. 2.

   What is the general purpose of using the FVA formula?

   Hint

   Consider why we care about future money that we invest regularly.

3. 3.

   What does FVA stand for?

   • Future Value of Assets
   • Future Value of Annuity
   • Forward Value of Annuity

   Hint

   Focus on the terms used: what describes future values related to annuities?

4. 4.

   True or False: FVA applies to a single payment only.

   • True
   • False

   Hint

   Think about how many payments you might make over time.

5. 5.

   A company plans to deposit ₹10,000 annually in a savings account with a 7% annual interest rate. How much will the total amount be after 15 years?

   Hint

   Break down each component and ensure you adjust for the total number of years.

6. 6.

   Mary decides to contribute ₹1,500 every month towards her child's college fund at an expected annual return of 5%. Determine how much she'll accumulate in 12 years.

   Hint

   Make sure to convert the annual rate to a monthly rate for accurate calculation.