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In common terms the future value of an annuity or regular annuity is specified by the subsequent formula:
FVAn = A (1 + k )n -1 + A (1 + k )n - 2 + ... + A ................................Eq(6)
A [((1 + k)n - 1)/k]
Future value of an annuity due:
FVAn(due) = A (1 + k )n + A (1 + k )n - 1 + ... + A(1 + k) ................................Eq(6)
....................................Eq(7)
= A [((1 + k)n - 1)/k] (1 + k)
Here FVAn = Future value of an annuity that has a duration of n periods
A = Constant periodic cash flow;
k = Interest rate per period;
n = duration of the annuity.
The term [((1 + k)n - 1)/k] is considered to as the future value interest factor for an annuity (FVIFAk,n). The value of its factor for some combinations of k and n are specified in the appendix at the end of this section.
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