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How to Find the Value of an Annuity

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question 1 of 3

Bob goes to the bank to ask about an annuity. Bob tells the banker that he can put $300 into an annuity every month. The banker tells him he can make monthly interest payments with an annual interest rate of 4%. Bob wants to know the value of his annuity after 20 years.

What is i equal to in this problem?

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1.

Bob goes to the bank to ask about an annuity. Bob tells the banker that he can put $300 into an annuity every month. The banker tells him he can make monthly interest payments with an annual interest rate of 4%. Bob wants to know the value of his annuity after 20 years.

What is n equal to in this problem?

2.

Bob goes to the bank to ask about an annuity. Bob tells the banker that he can put $300 into an annuity every month. The banker tells him he can make monthly interest payments with an annual interest rate of 4%. Bob wants to know the value of his annuity after 20 years, to the nearest dollar.

What is the future value after 20 years?

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About This Quiz & Worksheet

The value of an annuity depends on the amount of money contributed and interest compounded over time, as represented by a standard formula, and this quiz/worksheet combo will help you test your understanding of this concept. These practice questions will provide you with multiple scenarios in which you can test your understanding of annuities and the formula you can use to calculate an annuity's value.

Quiz & Worksheet Goals

In these assessments, you'll be tested on:

  • Defining the factors within the annuity value formula discussed in the lesson
  • How to use this formula to figure the future value of an annuity after x amount of years

Skills Practiced

This quiz and worksheet will test your skills in the following areas:

  • Reading comprehension - ensure that you draw the most important information on annuities and the formula used to calculate the value of an annuity over time from the related lesson
  • Problem solving - use your acquired knowledge to solve annuity formula practice problems
  • Defining key concepts - ensure that you can accurately define key ideas, such as what each individual variable in the formula represents in real-world situations
  • Knowledge application - use your knowledge to answer questions about scenarios involving annuity payments, interest, and future values

Additional Learning

In addition to completing this quiz and worksheet, you should read the related lesson. The lesson is called How to Find the Value of an Annuity. The lesson covers the following objectives:

  • Describe annuities and how they work
  • Describe the formula which you can use to calculate the value of an annuity
  • Define each individual variable that appears in this formula
  • Understand how to perform functions using this formula
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