How to Calculate Future Value of Annuity
What is Future Value of Annuity?
The future value of an annuity is the total value at a future date of a series of equal periodic payments invested at a fixed rate. Used to project retirement account balances, savings plan outcomes, and investment portfolio growth.
Step-by-Step Guide
- 1FV (ordinary annuity) = PMT × ((1+r)^n − 1) / r
- 2FV (annuity due, paid at start) = FV ordinary × (1+r)
- 3PMT = payment per period, r = periodic rate, n = number of periods
- 4Payments at the beginning of each period (annuity due) earn one extra period of interest
Worked Examples
Input
$500/month at 7%/year for 30 years
Result
$566,765
Only $180,000 contributed
Input
$1,000/month at 8%/year for 20 years
Result
$589,020
Invested $240,000, gained $349k
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