Hello My dear BBA/BCA/BCOM students. This is Prof. Dr. Shabnam S. Mane(Mahat). Welcome to My Youtube Channel – “Professor Shabnam Mane”. Today in this Video We will discuss FUTURE value of an Ordinary Annuity with example….(read more)

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Future value of Ordinary Annuity is an important concept in the field of finance and economics. It is used to calculate the value of a series of equal payments or cash flows made at regular intervals. This concept is important for individuals and businesses to understand as it helps in making decisions related to investments, retirement planning, and loan repayments.

An annuity is a financial product that provides a series of payments made at regular intervals over a specified period of time. There are two main types of annuities – ordinary annuities and annuities due. An ordinary annuity refers to payments that are made at the end of each period, while an annuity due refers to payments that are made at the beginning of each period. The future value of an ordinary annuity is the value of all the future cash flows or payments at a specified time in the future.

Understanding the future value of an ordinary annuity is important for individuals and businesses to make informed financial decisions. For example, individuals can use this concept to calculate the future value of their retirement savings or to determine the amount of money they need to save each month in order to achieve a specific financial goal. Similarly, businesses can use this concept to evaluate investment opportunities and to determine the future value of potential cash flows from an investment project.

The future value of ordinary annuity can be calculated using the time value of money formula. The time value of money is a concept that states that a dollar today is worth more than a dollar in the future. This is because money has the potential to earn interest or returns over time. Therefore, the future value of an ordinary annuity can be calculated by taking into account the interest or returns that the cash flows or payments will earn over time.

Students pursuing a degree in business administration, computer applications, or commerce, such as BBA, BCA, or BCOM, will come across the concept of future value of ordinary annuity in their finance and accounting courses. This concept is important for them to understand as it forms the basis of many financial calculations and decision-making processes in the business world.

In conclusion, the future value of ordinary annuity is an important concept in finance and economics. It helps individuals and businesses to calculate the value of a series of equal payments or cash flows made at regular intervals. Understanding this concept is crucial for making informed financial decisions related to investments, retirement planning, and loan repayments. Students pursuing a degree in business administration, computer applications, or commerce should have a clear understanding of this concept as it forms the foundation of many financial calculations and decision-making processes in the business world.