The future value of an annuity is the value of a group of recurring payments at a specified date in the future; these regularly recurring payments are known as an annuity.
The future value of an annuity formula assumes that the:
Formula to Calculate Future Annuity Value
Payment x [{( 1 + Rate Per Period ) ^ Number of Periods } - 1 ]/ Rate Per Period.
Example: Lets say X decides to save by depositing $500 into an account per year for 3 years. The first deposit would occur at the end of the first year. If a deposit was made immediately, then the future value of annuity due formula would be used. The effective annual rate on the account is 5%. Then upon feeding the respected values to the formula the balance at the end of the year would be : 1,576.25
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