Is this page helpful?
About Ordinary Annuity Formula
An ordinary annuity is a set amount of money paid out annually or on a regular basis. An annuity is a contract with an insurance company in which you make a payment (one-time large payment) or a series of payments in exchange for a regular fixed income that begins either immediately or at some future date. Ordinary annuity formula is used to calculate an amount's present and future value.
It's crucial to calculate the annuity's future value in order to account for inflation over time. The conventional annuity formula is described and examples are provided below. There are also calculations for future and present value annuities.
- Ordinary Annuity =P×[1−(1+r)-n]/[(1+r)t×r]
- Future value of an ordinary annuity
- P×((1+r)n−1) / r = FV
- Present value of an ordinary annuity P×(1−(1+r)n) / r =PV
where,
- P - Value of each payment
- r - Rate of interest per period in decimal
- n - Number of periods
where
- P: Value of Each payment
- R: rate of interest per period in decimal
- Number of periods
Get a List of Maths Formulas on one page
Download the pdf of Ordinary Annuity Formula
