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            Future Value Versus Present Value Assume that you have an opportunity to spend $10,000 today on some investment that will produce $15,000 spread out over the next 4 years as follows:

Annuity An annuity is a stream of equal periodic cash flows over a specified time period. These cash flows can be inflows of returns earned on investments or outflows of funds invested to earn future returns. Simply, we can say an Annuity is a series of payments made at equal intervals.

Time Value of Money The time value of money refers to that there are greater benefits to receive money sooner than later. Money that you have in hand today can be invested in earn a positive rate of return, producing more money in tomorrow. Because of that, a dollar is worth more than a dollar in the future.