Present Value of An Annuity Calculator
Posted by Dinesh onOnline present value of an annuity economics calculator to estimate payments to be paid in the future from the user inputs.
DEFINITIONS:
Present value of an annuity: lump sum amount that equals the value now of a set of equal periodic payments to be paid in the future.
Example:
Find the present value of an annuity with periodic payments of $2000, semiannually, for a period of 10 years at an annual interest rate of 6%, compounded semiannually.
PMT = 2000
i = .06/2 = .03
n = 2(10) = 20
K = 14.877
Now solve for PV:
PV = (PMT)K = 2000 × 14.87747 = $ 29,754.00
This sum will accumulate the same amount in 10 years as $2000 semiannually for 10 years.
Calculate Present value of An Annuity
Formula:
where,
PVA = Present value of An Annuity
A = The value of the individual payments in each compounding period
i = The discount rate, or the interest rate at which the amount will be compounded each period
n = The number of periods
PVA = Present value of An Annuity
A = The value of the individual payments in each compounding period
i = The discount rate, or the interest rate at which the amount will be compounded each period
n = The number of periods