Future Value (Ordinary Annuity)

vCalc Reviewed
Equation / Last modified by KurtHeckman on 2019/02/18 17:42
`FV = `
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vCalc.Future Value (Ordinary Annuity)
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The Future Value of an Ordinary Annuity calculator computes the future value (FV) of a fixed rate annuity based on a regular annuity payment, a fixed rate of return and a number of periods.

INSTRUCTIONS: Choose units and enter the following:

  • (PMT) regular annuity payment
  • (r) fixed interest rate of return period
  • (t) number of periods defining the duration.

Future Value (FV): The calculator returns the Future Value in U.S. dollars.  However, this can be automatically converted into other currency units (e.g Canadian Dollars) via the pull-down menu.

The Math / Science

The formula for the future value of an ordinary annuity is:

    `FV=PMT * ( ((1+r)^t)/r − 1/r)`

where:

  • FV = Future Value
  • PMT = regular annuity payment
  • r = percent rate of return per period
  • t = number of periods.

This formula calculates the future lump-sum value of of an annuity paid in fixed payments (PMT) based on a fixed interest rate (r) over a number of payments (t).  This formula could help an investor decide if they should accept a fixed payment of $20 each month for two years or $500 in a lump sum at the end of the two year period.

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