Estimate the future value of a regular series of equal annual investments for a specified period of time and rate of return.
Answer (1)
To estimate the future value of a series of equal annual investments, you can use the future value of an annuity formula. This formula calculates the total value of the investments, considering the compounding interest over the investment period. Future Value of an Annuity Formula:CodeFV = PMT * ((1 + r)^n - 1) / rWhere: FV: is the future value of the annuity.PMT: is the payment amount made each period (the annual investment).r: is the interest rate per period (the annual interest rate).n: is the total number of periods (the number of years the investments are made).Example:Let's say you invest $1,000 annually for 5 years at a 5% annual interest rate. To calculate the future value: PMT = $1,000: (annual investment)r = 0.05: (5% annual interest rate)n = 5: (number of years)
