# How to Apply Future Value of an Annuity Formula in Excel

This article will describe 2 easy methods to apply the Future Value of an Annuity Formula in Excel.

## Introduction to Annuity

An Annuity is a financial product that refers to a series of successive equal payments, either received or paid. It continues for a specific number of periods, with payments spaced equally in time. Accordingly, the Future Value of an Annuity means the value of this series of payments at some date in the future. The future value of annuity can be of two types:

• Future Value of Ordinary Annuity
• Future Value of Annuity Due

The Future Value of Ordinary Annuity is a repeating payment made at the end of each period, whereas the Annuity Due requires the payment at the beginning of each period.

## How to Apply Future Value of an Annuity Formula in Excel: 2 Easy Ways

We’ll use 2 methods to find the future value of an annuity in Excel: using a built-in Excel function, and creating a formula manually. To illustrate, we’ll use the dataset below, representing a fixed Payment amount (\$5,500), Interest Rate (7.3%), and the number of Periods (24).

### Method 1 – Using the FV Function to Get the Future Value of an Annuity

The FV function returns the future value of an investment. To get the value, we need to input the interest rate, the number of periods to pay the installments, and the fixed payment amount. We’ll find the Future Value for both Annuity types.

#### 1.1 – Regular Annuity

First, we’ll calculate the future value of the Regular Annuity.

Steps:

• Select cell C9.
• Enter the following formula:
`=FV(C6,C7,-C5,0,0)`
• Press Enter.

The precise output is returned.

#### 1.2 – Annuity Due

Now we’ll find out the future value of the Annuity Due.

Steps:

• Select cell C9.
• Enter the following formula:
`=FV(C6,C7,-C5,0,1)`
• Return the result by pressing Enter.

The accurate annuity due value is returned.

### Method 2 – Find the Future Value of an Annuity Manually with a Simple Formula

Alternatively, we can also create a simple formula manually by following the annuity equation.

#### 2.1 – Ordinary Annuity

Firstly, we’ll use the equation:

Ordinary Annuity = P * [(1 + i)n – 1] / i

Where,

P = Payment

i = Rate of Interest

n = Periods

Steps:

• Select cell C9.
• Enter the following formula:
`=C5*((1+C6)^(C7)-1)/C6`
• Press Enter.

The future value of the ordinary annuity is returned.

#### 2.2 – Annuity Due

Similarly, for the Annuity Due we’ll execute the formula:

Annuity Due = P * [(1 + i)n – 1] * (1 + i) / i

Steps:

• Select cell C9.
• Enter the following formula:
`=C5*((1+C6)^(C7)-1)*(1+C6)/C6`
• Press Enter.

The annuity due is returned.

## Related Articles

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Aung Shine

Aung Shine completed his bachelor’s in Electrical and Electronics Engineering from Bangladesh University of Engineering and Technology. It has been almost 2 years since he joined SOFTEKO and actively working on the ExcelDemy project. Currently he works as a Team Leader where he guides his team members to create technical content. He has published 150+ articles and reviewed 50+ articles. He has also solved various user problems before. He has interests in Data Analysis, Power Query, Advanced Excel,... Read Full Bio

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