What Is The Future Value Of An Annuity?
The future value of an annuity is the total value of a group of payments at some point in the future. An annuity is a series of payments, or cash flows, paid at regular intervals. The issuer of an annuity, which is usually an insurance company, will consider the annuity’s future value when determining the amount of the payments. In order to make an informed decision about whether an annuity is a good investment, an investor must know the future value of the annuity in order to compare it to other investments that are available. The calculation of the future value of an annuity takes into account the time value of money, which is the concept that a sum of money at the present time is worth more than the same sum, or a series of payments, in the future. The assumption is that the money will earn interest if invested, making the present value of the lump sum today greater than it would be in the future. The present value interest factor is used to calculate the amount of money received no
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