Generating Future and Present Values of Annuity Using Interest Rate Theory

Authors

  • Clement Adeyeye Awogbemi Statistics Programme, National Mathematical Centre, Abuja, Nigeria https://orcid.org/0000-0002-0942-7954
  • Alagbe Samson Adekola Mathematics Department, Morgan State University, Baltimore, Maryland, USA
  • Ajao Isaac Oluwaseyi Statistics Department, Federal Polytechnic, Ado-Ekiti, Nigeria

Keywords:

Annuity future value, Annuity present value, Continuous compounding, Compounding periods, Periodic payments

Abstract

In this study, the future and present values of annuity were generated on the basis of interest rate theory. This was anchored on the fact that every compound interest problem involves the annual rate and the rate per compounding period.  It was also shown that as the frequency of compounding periods increases, the compound amount behaviour (1+r/n)n tends to exponential growth rate (er). It was deduced that effective rate of interest is a function of nominal rates and compounding periods.

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Published

30-06-2023

How to Cite

Awogbemi, C. A., Adekola, A. S., & Oluwaseyi, A. I. (2023). Generating Future and Present Values of Annuity Using Interest Rate Theory. KEPES, 21(2), 269–276. Retrieved from https://scholopress.com/kepes-journal/article/view/81

Issue

Vol. 21 No. 2 (2023)

Section

Articles

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Copyright (c) 2023 Kepes

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