## Formula for the amount of an annuityAn annuity is a fixed sum of money paid at regular intervals. ## Amount of an annuity:P = sum deposited at the end of each year (beginning one year from when the annuity "starts") r = the interest rate, as a decimal (5%, for example, is r = 0.05) n = number of years the annuity has run N = total amount accumulated at the end of n years. N = (P/r)( (1 + r) So if $5000 is deposited yearly for 20 years at 5%, N = (5000/0.05)( (1 + 0.05) See also the formula for the present value of an annuity |