Annuity

An Annuity is financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. The Present Value of an annuity is:

${\text{PV (Annuity)}}$ $=$ ${\frac {1}{r}}-{\frac {1}{r(1+r)^{t}}}$

In Principles of Corporate Finance an annuity is defined as a an investment that produces a level stream of cash flows for a defined number of periods.

The future value of an annuity of a level of cash streams of \$1 is:

${\text{PV (Future Annuity)}}$ $=$ ${\frac {(1+r)^{t}-1}{r}}$

Source: http://www.investopedia.com/terms/a/annuity.asp