Ordinary Annuity

Explanation

An ordinary annuity is an investment that usually lasts several years. Over these years the investor makes regular payments into the annuity. The early payments into the investment will have a longer time to earn interest than the later payments. After a length of time has passed, the ordinary annuity has a final value.

Formula symbols:

S	Final value of annuity
R	Amount of payment
r	Annual percentage rate (APR)
k	Interest periods per year
i = r/k	Percentage rate per interest period
n	Number of payments

Final value after n payments:

S = R(((1 + i)ⁿ - 1) / i)

Below is a calculator for the future value of an ordinary annuity.

Enter values below for the above formula. When this page loads the payment amount is $500, the annual percentage rate (APR) is 5.0% (0.05), the payment period is monthly for 4 years.

(Example: For r enter 5.0% as 0.05, etc.)

Click the following 'Code' button to see the actual JavaScript code that executes in the above calculator.

Here's the code that runs when you click the above 'Calculate' button. It is shown here as an aid for your study and understanding.

You can change the code, if you like, and then click the following 'Reevaluate code' button. The program will then work as per your changes when you click the 'Calculate' button on the above calculator. Of course, your changes, especially random changes, can introduce errors, miscalculations, and browser crashes. If you need to get things back to their original condition, just reload this page using your browser's reload button.

Again, the intention here is to conveniently show you the inner workings of this program so that you understand how the program arrives at the result. Click the 'Code' button again to close this section.

window.calculate = function()
{
	var S = 0.0;
	var R = 0.0;
	var r = 0.0;
	var k = 0.0;
	var n = 0.0;
	var i = 0.0;

	R = parseFloat(document.inputForm.R.value);
	r = parseFloat(document.inputForm.r.value);
	k = parseFloat(document.inputForm.k.value);
	n = parseFloat(document.inputForm.n.value);

	i = r / k;
	
	S = R * ((Math.pow((1 + i), n) - 1) / i);

	alert("S, final value of annuity = " + S);
};