Annuity Calculation
Enter your annuity details to calculate the present value
The amount you receive or pay each year
Annual discount rate (required rate of return)
Number of years you will receive payments
Understanding Annuities
Learn about annuity calculations and their applications
What is an Annuity?
An annuity is a series of equal payments made at regular intervals. The present value of an annuity calculates what those future payments are worth in today's money, considering the time value of money and your required rate of return.
Common Uses
- • Pension and retirement planning
- • Insurance annuity valuations
- • Loan payment calculations
- • Investment analysis
- • Business cash flow planning
Key Concepts
- • Present Value: Today's value of future payments
- • Future Value: Total value at the end of the period
- • Annuity Factor: Multiplier for converting payments to PV
Decision Making
- • Higher PV: Annuity is more valuable
- • Compare Options: Use PV to compare different annuities
- • Rate Sensitivity: Lower rates = higher present values
What is an Perpetuity?
A perpetuity is a constant cash flow at regular intervals forever and the present value is obtained by dividing the cash flow by discount rate.
For Example: The value of console Bond that pays $60 coupon each year, if interest rate is 9% is $60/0.09 = $667