The image above represents annual worth.

To compute for annual worth, three essential parameters are needed and these parameters are **Gradient Amount (G), Interest Rate (i) **and **Number of Years (N).**

The formula for calculating annual worth:

A = G[((1 + i)^{N}) – iN – 1] / [((1 + i)^{N}) – 1]

Where:

A = Annual Amount or Worth (Conversion Factor)

G = Gradient amount

i = Interest Rate

N = Number of Years

Let’s solve an example;

Find the annual worth when the gradient amount is 11, the interest rate is 0.2 and the number of years is 12.

This implies that;

G = Gradient amount = 11

i = Interest Rate = 0.2

N = Number of Years = 12

A = G[((1 + i)^{N}) – iN – 1] / [((1 + i)^{N}) – 1]

A = 11[((1 + 0.2)^{12}) – 0.2(12) – 1] / [((1 + 0.2)^{12}) – 1]

A = 11[((1.2)^{12}) – 2.40 – 1] / [((1.2)^{12}) – 1]

A = 11[8.916 – 2.40 – 1] / [8.916 – 1]

A = 11[5.516] / [7.916]

A = 11 x 0.696

A = 7.66

Therefore, the **annual worth **is **₦7.66.**