To annuitize a sum of money means to convert the sum to a series of monthly incomes such as the creation of a monthly retirement income flow.
Example: ( Ordinary Annuity Certain)
What is the value of a monthly contribution of $100 over 5 years at an interest rate of 5%? compounding monthly.
Using a simple interest formula, one could go through the process of calculating the value of each contribution. Shown below, however, this would be a lot of work and can be calculated using a formula because the contribution amount and the intervals are consistent. See step 2 next for the actual annuity formula.