Annuities

Retirement Planning

# The factor for the future value of an annuity due is found by multiplying the ordinary annuity table value by one minus the interest rate?

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## Related Questions

###### Asked in Investing and Financial Markets

### When do you use fvif and fvifa?

An Annuity is a series of payments of a fixed amount for a
specified number of equal length periods When the FV of an annuity
is known, and you need to calculate the value of each payment, or
the FVIFA, then: FVIFA = Future Value Interest Factor Annuity
FVIFA = ((1 + r)t -1)/r FVA = Future Value of an Annuity
FVA = PMT x (FVIFA r, t) * where:
PMT = Regular payments
r = discount rate - (interest rate of your choosing)
t = number of periods (time) of annuity - (number of years for
example) When the PV of an annuity is already known, and you need
to calculate the value of each payment, or the PVIFA, then: PVIFA =
Present Value Interest Factor Annuity
PVIFA = ((1/r) - 1/r(1+r)t ) PVA = Present Value of an
Annuity
PVA = PMT x (PVIFA r, t) * where:
PMT = Regular payments
r = discount rate - (interest rate of your choosing)
t = number of periods (time) of annuity - (number of years for
example)

###### Asked in Annuities

### What is an equity indexed annuity?

An equity indexed annuity is a fixed annuity product offered by
an insurance company. It is a unique product for those individuals
who want reliability without the risk of loss from the market as in
a variable product. You place a sum of money or periodic payments
into a product that the company utilizes a market in order to
factor what interest you will make. You will not lose your
principle or accrued interest due to market loss because your money
is never in the market or index.

###### Asked in Math and Arithmetic, Calendar, Apostrophes and Ellipses

### What is the total present value of 80 received in one year 300 received in two years and 700 received in six years if the discount rate is 7?

$3304.85
The basic problem can be broken down like this:
First find the PV of the sum of $80 that is received in year 1.
Using interest factor (1yr @7%) tables found in most finance text
books that will be $74.80 ($80*0.935)
Next you need to find the PV of annuity for two years of $300
@7%. Using interest factors this will be $542.20 ($300*1.808). But
this is the PV at year 1 since the payments started in Year 2. Now
you need to convert this PV to year 0 by using the interest factor
for a sum for one year and multiplying $542.20 by this factor
(0.935). This will give a result of $507.14
Finally you need to find the PV of annuity for six years of
$700 @7%. Using the interest factors this will be $3336.90
($700*4.767). But this is the PV at year 3, so you will need to
convert this to PV @ year 0 buy multiplying this # by the interest
factor for the PV of a sum for 3 yrs @7% (0.816) to get
$2722.91
Now you add the three results together to get the present value
@ year 0: $74.80 + $507.14 + $2722.91 to get the answer of
$3304.85

###### Asked in Math and Arithmetic

### What is 8x12?

###### Asked in Annuities

### How does one go about calculating an annuity payment?

One goes about calculating an annuity payment in a number of
ways. First, one must determine the type of annuity. Second, one
must find the option for payout. Then, one must determine the other
details about the annuity and finally, factor in how the payment
will be working in relation to the time frame of payment.

###### Asked in Taxes and Tax Preparation, Annuities, Retirement Planning

### You are purchasing an annuity with all after tax dollars why is a portioin of your monthly payment taxable until you have withdrawn your investment?

A portion of your payment is taxable because there is an
interest rate factor that is paid on the after tax portion
resulting in taxable gain. Normally, interest paid to you would all
be taxed first under the LIFO ruling (last in, first out) like in a
C.D.. However, an immediate annuity allows you to spread that
interest (gain) out over the period of the contract which usually
benefits you in regards to income taxes. So, every payment has a
"tax-free" portion and a "taxable"portion.