future value of 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.

1. How do you calculate the future value of an annuity?
2. What is present and future value of annuity?
3. How do you value an annuity?
4. What is the future value of an annuity due?
5. Why is annuity due higher than ordinary annuity?
6. What does present value of annuity mean?
7. What will be the future value of money?
8. How much does a 100000 annuity pay per month?
9. What is the first step in illustrating an annuity problem?
10. What is amount of annuity?

How do you calculate the future value of an annuity?

The formula for the future value of an ordinary annuity is F = P * ([1 + I]^N - 1 )/I, where P is the payment amount. I is equal to the interest (discount) rate. N is the number of payments (the “^” means N is an exponent). F is the future value of the annuity.

What is present and future value of annuity?

Present value and future value are terms that are frequently used in annuity contracts. The present value of an annuity is the sum that must be invested now to guarantee a desired payment in the future, while its future value is the total that will be achieved over time.

How do you value an annuity?

Present Value of Annuity

1. The present value of annuity formula determines the value of a series of future periodic payments at a given time. ...
2. When the periodic payments or dividends are all the same, this is considered a geometric series. ...
3. This equation can be simplified by multiplying it by (1+r)/(1+r), which is to multiply it by 1.

What is the future value of an annuity due?

The future value of annuity due formula is used to calculate the ending value of a series of payments or cash flows where the first payment is received immediately. The first cash flow received immediately is what distinguishes an annuity due from an ordinary annuity.

Why is annuity due higher than ordinary annuity?

The payments made on an annuity due have a higher present value than an ordinary annuity due to inflation and the time value of money.

What does present value of annuity mean?

The present value of an annuity refers to how much money would be needed today to fund a series of future annuity payments. Because of the time value of money, a sum of money received today is worth more than the same sum at a future date.

What will be the future value of money?

Future value is the utility of cash or an asset at a particular date in the future. ... You get an idea of how much an investment today is worth in the future. The future value is important to both investors and financial planners, as they may estimate how much an investment today is worth in the future.

How much does a 100000 annuity pay per month?

The payouts are based primarily on your age, your gender and the interest rates when you buy the annuity. For example, a 65-year-old man who invests $100,000 in an immediate annuity could get about $494 per month for life ($5,928 per year). A 65-year-old woman could get about $469 per month ($5,628 per year).

What is the first step in illustrating an annuity problem?

Annuity Problem.

The first step is to convert the annual discount rate to a semiannual rate: The above formula can be solved algebraically to get r_semiannual=3.92%.

What is amount of annuity?

An annuity is an investment in which the purchaser makes a sequence of periodic, equal payments. To find the amount of an annuity, we need to find the sum of all the payments and the interest earned. In the example, the couple invests $50 each month. This is the value of the initial deposit.