What is the future value of an annuity give an example?
Christopher Davis
Updated on February 10, 2026
The future value of any annuity equals the sum of all the future values for all of the annuity payments when they are moved to the end of the last payment interval. For example, assume you will make $1,000 contributions at the end of every year for the next three years to an investment earning 10% compounded annually.
What is the future value of an annuity?
The future value of an annuity is the value of a group of recurring payments at a certain date in the future, assuming a particular rate of return, or discount rate. The higher the discount rate, the greater the annuity’s future value.
How do you value an annuity?
The Present Value of Annuity Formula
- P = the present value of annuity.
- PMT = the amount in each annuity payment (in dollars)
- R= the interest or discount rate.
- n= the number of payments left to receive.
How to calculate the future value of an annuity?
Question: P5–19 Future Value Of An Annuity For Each Case In The Accompanying Table, Answer The Questions That Follow. Case Amount Of Annuity Interest Rate Deposit Period (years) A $ 2,500 8% 10 B 500 12 6 C 30,000 20 5 D 11,500 9 8 E 6,000 14 30 Calculate The Future Value Of The Annuity, Assuming That It Is (1) An Ordinary Annuity.
How much money should I invest in an annuity?
Your client is 40 years old and wants to begin saving for retirement. You advise the client to put Rs. 5,000 a year into the stock market. You estimate that the market’s return will be on average of 12% a year. Assume the investment will be made at the end of the year. How much money will she have by age 65 by factor formula and table?
How much is the first payment of an annuity?
Suppose that you start a savings plan by depositing Rs. 1,000 at the beginning of every year into an account that offers 8% per year. If you make the first deposit today, and then three additional ones, how much will have accumulated after four years? An annuity makes 25 annual payments of Rs. 1,000 with the first payment coming today.
