Investment
What is the future value of an annuity?
Annuity FV is the accumulated amount of equal payments at regular intervals at the last period.
Definition
Annuity FV is the accumulated amount of equal payments at regular intervals at the last period.
Intuition
Earlier payments have more time to compound, so annuity due usually exceeds ordinary annuity FV.
Formula
Annuity FV is payment times the accumulation factor; payments at period start gain one more period of growth.
Formula and assumptions
PMT is the periodic payment, i the annual rate divided by payment frequency, and n the count. Rate, payment schedule, and compounding frequency are fixed; use Compound Interest when an initial principal also matters.
Example
- Set payment 100, annual rate 10%, three annual payments.
- End-of-period FV is 100×1.1² + 100×1.1 + 100 = 331.
- Beginning-of-period FV is 331×1.1 = 364.10; total contributions are 300 in both cases.
Common mistakes
Do not use an annual rate as a monthly rate or confuse beginning and end-of-period payments.
Frequently asked questions
How is this different from the compound interest calculator?
This is the standard equal-payment formula. Compound Interest also models an initial principal and monthly contributions with yearly growth.
Is there a gain at zero interest?
No. Future value equals total payments.
Does this predict investment returns?
No. A fixed rate is an assumption; market variation, taxes, fees, and missed payments change outcomes.