## Future value of an annuity:

An annuity is a series of equal cash flows. The future value of an annuity is computed on the basis of time value of money. An annuity may be paid at the beginning of a specified period or at the end. Therefore an annuity can be classified as an annuity due or ordinary annuity respectively.

• {eq}FV \ of \ an \ ordinary \ annuity = Annuity * \dfrac{( (1 + r )^{n} - 1) }{ r} {/eq}
• {eq}1,000,000 = 10,000 * \dfrac{( (1 + 0.05 )^{n} - 1) }{ 0.05} {/eq}
• {eq}6 = 1.05^{n} {/eq}

Introduce logs to determine the value of n:

• {eq}n = \dfrac{ log(6)}{log( 1.05)} {/eq}
• {eq}n = 36.7238 {/eq}