The Future Value of an Annuity of $1 Per Period is the amount to which a regular periodic investment of $1 grows at compound interest for a given number of years at a specified interest rate. See column 2 of the compound interest tables for the factors.
To calculate the future value of an annuity, multiply the amount of the annuity by the factor from the appropriate compound interest table.
An appraiser saves $1,000 per month. How much will he have in 10 years if a reasonable return is 7%?
|1.||Use the monthly 7% compound interest table - FV of an annuity of $1 column|
|2.||Go to the 10 year line - the factor is 173.084807|
|3.||$1,000 x 173.084807 = $173,085|