This present value of annuity calculator takes the figures you already have and applies the relationship behind present value of annuity calculations for you, giving periodic equivalent interest rate, equivalent interest rate and present value of annuity from payment amount, annuity term, compound frequency, growth rate of annuity, interest rate, payment frequency, type of annuity and one way.
What Is the Present Value of Annuity Calculator?
The present value of annuity calculator takes payment amount, annuity term, compound frequency, growth rate of annuity, interest rate, payment frequency, type of annuity and one way and turns them into periodic equivalent interest rate, equivalent interest rate and present value of annuity.
It is the kind of calculation you would otherwise do on the back of an envelope: mechanical, repeatable and easy to get subtly wrong without noticing.
How the Present Value of Annuity Figure Is Built
Each result is calculated from the ones before it, so the working is fully visible. That matters when the answer is going to be quoted to somebody else and you need to be able to explain where it came from.
The figures are exactly as good as the assumptions underneath them. Check the rates, the periods and the tax treatment before you rely on the result.
Reading the Result Sensibly
A small change in an input can move the result by much more than you would expect, particularly where the calculation divides by one of the figures you supplied. That is worth understanding before you rely on a figure.
For anything that will be committed to, write the inputs down beside the result. A number you can reproduce is worth far more than one you cannot explain.
A Worked Example
Working through an example, with payment amount set to 10, annuity term set to 5, compound frequency set to 1.000000000000000, the calculator returns equivalent interest rate of 100, and periodic equivalent interest rate of 100, and number of periods of 5. Substitute your own figures and the same steps produce the same kind of answer.
Frequently Asked Questions
What do I need to work out periodic equivalent interest rate?
Enter payment amount, annuity term, compound frequency, growth rate of annuity, interest rate, payment frequency, type of annuity and one way. The calculator then works through the relationship and reports periodic equivalent interest rate, equivalent interest rate and present value of annuity.
What does the present value of annuity actually calculate?
It takes payment amount, annuity term, compound frequency, growth rate of annuity, interest rate, payment frequency, type of annuity and one way and converts them into periodic equivalent interest rate, equivalent interest rate and present value of annuity using the standard relationship for this problem. Each step is applied in turn, so every output is traceable back to the numbers you typed in.
How should I enter payment amount?
Use the value you actually have, in the unit shown next to the field. Enter every value in the same unit system. The calculator assumes the figures you supply are consistent, so it cannot correct a mistake that happens before the calculation starts.
Does anything you type get stored?
No. The whole calculation runs inside your browser, and nothing you enter is uploaded, logged or sent anywhere.
Is the answer exact?
It is as exact as the formula and the inputs allow. The method itself is the standard one for this problem, so the only sources of error are the figures you enter and the precision you ask for.