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Future Value of Annuity Formula:
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The Future Value with Payments formula calculates the future value of a series of equal payments (annuity) made at regular intervals, considering compound interest. It's commonly used for retirement planning, savings calculations, and investment analysis.
The calculator uses the future value of annuity formula:
Where:
Explanation: This formula calculates the accumulated value of regular payments when each payment earns compound interest until the end of the investment period.
Details: Understanding future value helps in financial planning, retirement savings strategies, investment decisions, and comparing different savings options. It shows how regular contributions can grow over time with compound interest.
Tips: Enter the regular payment amount in dollars, interest rate as a decimal (e.g., 0.05 for 5%), and the number of periods. All values must be positive numbers.
Q1: What's the difference between ordinary annuity and annuity due?
A: Ordinary annuity assumes payments at the end of each period, while annuity due assumes payments at the beginning. This calculator uses ordinary annuity formula.
Q2: How do I convert annual rate to periodic rate?
A: Divide annual rate by number of periods per year. For monthly payments with 6% annual rate, use 0.06/12 = 0.005 as the periodic rate.
Q3: Can this be used for loan calculations?
A: This formula is for savings/investments. For loans, use present value of annuity formulas instead.
Q4: What if payments increase over time?
A: This formula assumes constant payments. For growing payments, use growing annuity formulas.
Q5: How accurate is this calculation?
A: It provides theoretical future value assuming constant rate and regular payments. Actual results may vary due to market fluctuations and other factors.