- What Is The Difference Between A Future Value Annuity And A Present Value Annuity?
- difference between present value of ordinary annuity and annuity due?
- what is the real difference between “Future value of an ordinary annuity” and “Future value of an annuity DUE”
- What is the relationship between the present value and future value of an annuity?
What’s The Difference Between Future Value Annuity And Present Value Annuity?
18
Jan
Michael
January 18, 2010 at 12:52 am
Future value of an annuity is what all the payments will be worth in the future. Whereas present value of an annuity is what all future payments are worth today. I don’t know how detailed an answer you’d like but I pasted a link in case you need formulas.
FV of an annuity is good for solving questions like “If I saved $100 a month for the next 10 years at an interest rate of 2%, how much will I have 10 years from now?”
PV of an annuity is good for answering questions such as “How much should my company pay me in lump sum to buy out my pension package?”
The link referenced is pretty good. It’ll help if your question is more academic and you need formulas. Holler if you need more detailed explanation. Hope this helps.