Annuity Calculator Formula & How It Works
FV = PMT × [(1+r)ⁿ − 1] / r | PV = PMT × [1 − (1+r)^−n] / r
- Ordinary annuity: payments at end of each period
- Annuity due: payments at beginning of each period (× (1+r))
- PMT = Periodic payment amount
- n = Number of payment periods
An annuity is a series of equal periodic payments. Ordinary annuity payments occur at period end (loans, mortgages). Annuity due payments occur at period start (leases, insurance). The FV formula finds how much you'll accumulate; PV finds the lump sum equivalent of future payments. Insurance company annuities add longevity protection.