Present Value Annuity Calculator

A Present Value Annuity Calculator or Annuity Calculator serves the purpose of finding the „present value“ of a regular series of future payments.

The following annuity calculator will help you figure out the present value of your future payments (or earnings). Fill in three of the four fields in the following table and leave the fourth blank. It will be calculated for you as you hit "calculate".

Present Value Annuity Calculator*

Fixed payment amount:	e.g. 400 ($)
Number of payments:	e.g. 12 (payments)
	monthly payments yearly payments
Yearly fixed interest rate (%):	e.g. 9.9 (%)


Present value of the annuity:




*Enter any of the three values and leave the one field empty and click "Calculate".

Note that this calculator also serves the purpose of an Annuity Rates Calculator. If you leave the third field open instead and provide the others with the necessary data it will calculate the required return. In fact you can leave any field open and fill in the remaining ones to get the value of the required variable.

An annuity is a series of regular future payments with a clear agreement on the amount, a set interest rate (interest payments are usually required on loaned money) and a time horizon, i.e. by what date the full amount has to be paid back to the creditor.
Good examples for annuities are car leases or mortgage payments since they fulfill the above mentioned criterias. The annuity calculator works by the following implemented Present Value of Annuity Formula:

Present Value Annuity Formula

Present Value of Annuity

C:        amount of fixed payment
r:         interest rate (annuity rate)
t:         number of payments

Present Value Annuity Example

Let us assume that you went and got a mortgage loan on your home. By signing a contract you received immediate money on your hand, which is nice, but you also had to commit to make future regular payments to the bank until the full debt plus interest has been paid back completely.

So what is a present value of an annuity calculation now good for? Let us think about the bank’s role for a second. How would it be able to know how much money it could give you in the first place for your regular future payments. Somehow the bank has to evaluate what your future payments are worth to them now, in the present, even though they have not received any of your payments yet. The present value annuity calculation or in short annuity lets you calculate exactly this.

Let us assume you went for a 30-year mortgage. This would result in 30 x 12 = 360 future payments. You agreed on paying 1000 dollars every month assuming a yearly interest rate of 4.5%. Using the annuity formula we can now calculate what your contract is worth to the bank. It is very important that you do not use monthly payments with a yearly annuity rate. You will have to adjust the annuity payments to the annuity rate by multiplying the monthly payments with 12 (for the 12 months). or you will come up with a completely false result!

In the above annuity calculator this adjustment is made by clicking the appropriate button of either monthly or yearly payments. For our example this results in 30 payments (for the 30 years of the mortgage) of 12'000 $ (per year). Putting these variables in the formula above, this results in a present value of $195'466:

The Residual Income Valuation Model values a company by dividing it in two imaginitative parts, the present value of all future residual incomes and the book value of all real assets.