💵 Present Value of Annuity Calculator
Calculate present value of regular payments
Enter periodic rate (monthly, annual, etc.)
How to Use This Calculator
Enter Payment Per Period
Input the payment amount made each period (monthly, quarterly, etc.). This is the fixed amount you'll receive or pay each period.
Enter Interest Rate Per Period
Enter the interest rate per period (not annual rate). For monthly payments, divide annual rate by 12. For quarterly, divide by 4. This is the discount rate used to calculate present value.
Enter Number of Periods
Enter the total number of periods (payments) in the annuity. For example, if paying monthly for 10 years, enter 120 (10 × 12).
Review Present Value
See the present value of the annuity - the current worth of the future payment stream. This shows what the payments are worth today (discounted value).
Formula
Present Value = PMT × [(1 - (1 + r)^-n) / r]
Where:
• PMT = Payment per period
• r = Interest rate per period
• n = Number of periods
Example Calculation:
If payment $1,000/month, annual rate 6% (monthly rate 0.5%), 12 months:
• Monthly rate = 6% ÷ 12 = 0.5%
• Present Value: ~$11,618
• Total payments: $12,000
• PV is less because of time value of money!
About Present Value of Annuity Calculator
A present value of annuity calculator determines the current worth of a series of future periodic payments, discounted at a given interest rate. Present value accounts for the time value of money - money received in the future is worth less than money received today because it could be invested and earn interest. This calculator is essential for loan analysis, retirement planning, investment decisions, and determining the current value of future payment streams.
When to Use This Calculator
- Loan Analysis: Determine present value of loan payments
- Retirement Planning: Calculate present value of pension or annuity payments
- Investment Decisions: Compare lump sum vs. annuity payments
- Lease Analysis: Determine present value of lease payments
Understanding Present Value
- Time Value of Money: Money today is worth more than money in the future
- Discounting: Future payments are discounted to present value
- Interest Rate: Higher rates mean lower present value
- Ordinary Annuity: Payments made at end of period (most common)
Why Use Our Calculator?
- ✅ Present Value: See current worth of future payments
- ✅ Loan Analysis: Understand loan principal value
- ✅ Investment Planning: Compare payment options
- ✅ Financial Planning: Analyze payment streams
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is present value of annuity?
Present value of annuity is the current worth of a series of future periodic payments, discounted at a given interest rate. It accounts for the time value of money - money received in the future is worth less than money received today because it could be invested and earn interest. For example, receiving $1,000/month for 12 months has a present value less than $12,000 because future payments are worth less today.
How is present value different from future value?
Present value shows what future payments are worth today (discounted value), while future value shows what payments will be worth in the future (compounded value). Present value is used for loan analysis or determining today's value of future payments. Future value is used for savings planning or determining future value of investments.
What's the difference between ordinary annuity and annuity due?
An ordinary annuity has payments made at the end of each period (most common). An annuity due has payments made at the beginning of each period. For annuity due, the present value is higher because payments are received sooner. To convert ordinary annuity to annuity due, multiply by (1 + r).
How do I use this for loan analysis?
Present value of annuity is used to calculate loan principal - the amount you can borrow based on your payment amount, interest rate, and loan term. For example, if you can afford $1,000/month payments at 6% interest for 30 years, the present value shows the loan amount you can afford. This is the same calculation used by lenders to determine loan amounts.