When calculating the interest and future value of an ordinary annuity, money is invested at the end of the year.
A regular annuity is a series of payments that are made at the conclusion of each period. Calculating the amount of money that will be returned to an investor on a future date if the investor makes a series of payments previous to that date, assuming that the funds are invested at a specific interest rate, is a frequent financial planning concept.
Future value is the worth of a sum of money that will be paid on a specific future date. Since every payment is made at the end of a period, the formula for an average annuity's potential price refers to the value of a series of periodic payments on a given date in the future.
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