Future Value of an Annuity What is the future value of a $900 annuity payment over five years if interest rates are 8 percent?

The future value of a $900 annuity payment over five years with an 8% interest rate can be calculated using the following formula: FV = PMT x ((1 + r)^n – 1 / r). In this equation, FV is the future value, PMT is the payment amount, r is the interest rate and n is the number of payments. Calculating for these variables we get: FV = 900 x ((1 + 0.08)^5 – 1/0.08), which equals $4786.94.

This means that after five years of receiving $900 payments at an 8 percent interest rate, the total accumulated value will be $4786.94. The actual money received during each period would be slightly higher due to compound interest however; as money accumulates in an account it begins earning additional income through compounding which increases returns exponentially compared to simple interest formulas where gains are added on periodically without any reinvestment.

In conclusion, calculating the future value of annuities helps individuals make informed decisions while setting up retirement plans or other kinds of investment strategies that involve periodic payments such as mortgages or car loans. Knowing what one’s investments are likely to produce in terms of profits gives them more control over their financial goals as they plan for their futures accordingly.