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Present Value for Annuity Calculator

This Present Value for Annuity Calculator helps you determine the current worth of a series of future payments based on a fixed interest rate and payment term.

Annuity Present Value Estimator

Input Fields
P
$
Enter the amount of each periodic payment
r
%
Enter the annual interest rate
n
years
Enter the number of years for the annuity

Present Value of Annuity Formula

Formula
\[ PV = P \times \frac{1 – (1 + r)^{-n}}{r} \]

Where:

  • $$PV$$ = Present value of the annuity
  • $$P$$ = Payment amount per period
  • $$r$$ = Interest rate per period (as decimal)
  • $$n$$ = Total number of payment periods


Calculation Example

Suppose you expect to receive $500 per month for 10 years at an annual interest rate of 6% (0.5% monthly).

Given:

  • Payment P=500
  • Monthly interest rate r=0.005
  • Number of months n=120

Calculation:

  1. $$PV = 500 \times \frac{1 – (1 + 0.005)^{-120}}{0.005}$$
  2. $$PV = 500 \times \frac{1 – (1.005)^{-120}}{0.005}$$
  3. $$PV = 500 \times \frac{1 – 0.5488}{0.005}$$
  4. $$PV = 500 \times \frac{0.4512}{0.005}$$
  5. $$PV = 500 \times 90.24$$
  6. $$PV = 45,120$$

Thus, the present value of the annuity is approximately $45,120.

The Present Value for Annuity Calculator is useful for evaluating the current worth of future periodic payments. It helps in financial planning, retirement calculations, and investment decisions where recurring payments are involved.

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