Future Value of Ordinary Annuity Calculator

Future Value of Ordinary Annuity Formula:

\[ FV = PMT \times \sum_{k=1}^n (1 + r)^{n-k} \]

Future Value (FV):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Future Value of Ordinary Annuity?

The Future Value of an Ordinary Annuity calculates the value of a series of equal payments at regular intervals at some point in the future, assuming compound interest. It's commonly used in retirement planning and loan calculations.

2. How Does the Calculator Work?

The calculator uses the Future Value of Ordinary Annuity formula:

\[ FV = PMT \times \sum_{k=1}^n (1 + r)^{n-k} \]

Where:

\( FV \) — Future Value of the annuity
\( PMT \) — Periodic payment amount
\( r \) — Interest rate per period (in decimal form)
\( n \) — Number of payment periods

Explanation: The formula sums up each payment compounded forward to the future value date.

3. Importance of FV Calculation

Details: Understanding the future value helps in financial planning, retirement savings projections, and comparing different investment options.

4. Using the Calculator

Tips: Enter the periodic payment amount, interest rate per period (as decimal), and number of periods. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between ordinary annuity and annuity due?
A: Ordinary annuity payments are made at the end of each period, while annuity due payments are made at the beginning.

Q2: Can this be used for monthly payments?
A: Yes, just ensure the interest rate matches the period (use monthly rate for monthly payments).

Q3: What if payments grow over time?
A: This calculator assumes constant payments. For growing payments, you'd need a growing annuity formula.

Q4: How does compounding frequency affect results?
A: More frequent compounding increases future value. Always match rate to payment frequency.

Q5: Can this calculate loan balances?
A: Yes, it can calculate the future value of loan payments, though present value is more common for loans.