Present Value of Annuity Calculator
Use this present value of annuity calculator to estimate what a stream of future payments is worth today.
Last updated:
Results
- Present value
- $15,443.47
- Total future payments
- $20,000.00
- Discount difference
- $4,556.53
Formula
PV = PMT × [1 − (1 + r)^(−n)] / r
Annuity due: PVdue = PV × (1 + r)
How to calculate
- Enter the amount of each payment.
- Enter the discount rate per period.
- Enter the number of payments.
- Apply the present value of annuity formula.
- If payments are at the beginning of each period, use the annuity due adjustment.
Worked example
$2,000/year for 10 years at 5%: PV = 2,000 × [1 − (1.05)^(−10)] / 0.05 ≈ $15,443.47.
Why present value matters
Present value helps compare future payments in today's dollars. Because money available today can be invested or used immediately, future payments are usually worth less than their face value.
This calculator applies a discount rate to estimate what those future payments are worth right now.
Common uses of present value of annuity
This calculation is often used for retirement income planning, insurance settlements, pension analysis, and business cash flow valuation. It is especially helpful when comparing a lump sum today with a stream of equal payments over time.
Frequently asked questions
What is the present value of an annuity?
It is the value today of equal payments that will be received in the future.
Why use present value instead of total payments?
Because receiving money in the future is not the same as having money today.
What is annuity due?
An annuity due means payments occur at the beginning of each period.
Who uses this calculation?
It is commonly used in retirement, insurance, business valuation, and settlement comparisons.
Related calculators
Educational guides
Short explainers covering the math and concepts behind this calculator.
This tool is for educational and planning purposes only.