How to Use the Calculator
- Enter the regular payment amount you plan to make
- Input the annual interest rate (APR) your investment or savings account offers
- Specify the number of years you plan to make payments
- Select how frequently you will make payments (monthly, quarterly, etc.)
- Click the "Calculate" button to see the future value of your annuity
Understanding the Formula
The calculator uses the future value of an ordinary annuity formula:
FV = P × [(1 + r/n)^(nt) - 1] / (r/n)
Where:
- FV = Future Value of Annuity
- P = Payment Amount (the fixed amount you pay each period)
- r = Annual Interest Rate (as a decimal)
- n = Number of Payments per Year
- t = Number of Years
Example Usage
Suppose you want to save $500 every month for 10 years in an account that offers 4% annual interest, compounded monthly. Your future value would be approximately $73,632.86.
Important Notes
- This calculator assumes payments are made at the end of each period
- The interest rate should be the effective annual rate for the payment frequency selected
- This is a simplified model and does not account for taxes, fees, or changes in interest rates