Worked examples
| Payment | Rate / periods | Future value (ordinary) |
|---|---|---|
| $100/mo | 0.5%/mo, 120 | $16,388 |
| $500/yr | 5%/yr, 20 | $16,533 |
| $1,000/yr | 6%/yr, 30 | $79,058 |
| $200/mo | 0.4%/mo, 240 | $80,358 |
Common questions
What is the difference between an ordinary annuity and an annuity due?
An ordinary annuity pays at the end of each period, while an annuity due pays at the start. The annuity due is worth slightly more because every payment earns one extra period of interest.
How does payment frequency affect future value?
More frequent payments and compounding build value faster, so monthly contributions usually beat a single yearly contribution of the same total.
