Present Value of Annuity Calculator - Payment Value
Find the current value of equal future payments, whether paid at the end or beginning of each period.
Enter the payment details and choose the annuity type, then select Calculate to review the result.
About the Present Value of Annuity Calculator
The present value of an annuity is today’s worth of equal payments that arrive on a fixed schedule. An ordinary annuity pays at the end of each period, which is the usual pattern for loan installments and many coupons. An annuity due pays at the beginning of each period, which is the usual pattern for rent paid in advance. Because every annuity-due payment arrives one period earlier, its present value equals the ordinary-annuity present value multiplied by one plus the periodic rate. Formula: ordinary PV = PMT × [1 − (1 + r)^(−N)] / r, where r is the annual rate divided by payments per year and N is years × payments per year. Annuity-due PV = ordinary PV × (1 + r). If the annual rate is zero, both types equal PMT × N. Total payments always equal PMT × N regardless of timing. Monthly payments use frequency 12, quarterly use 4, and annual use 1. The annual rate is converted to a periodic rate by dividing by frequency; the calculator does not convert a nominal rate into an effective annual rate first. Payment timing is the most common source of disagreement with a loan statement. If the first payment is due immediately, choose Annuity Due. If the first payment is due at the end of the first month or year, choose Ordinary Annuity. Growing payments, extra fees, and irregular final installments are outside this model. A balloon remaining after a series of level payments should be discounted separately as a single present value and then added. Use the present value of annuity calculator to value a lease, to see how much a pension installment stream is worth as a lump sum, or to cross-check the principal portion implied by a level loan payment. Compare ordinary and due results at the same rate to quantify the cost of paying in advance. The output is a planning estimate in US dollars, not a loan offer, annuity quote, or tax valuation. Confirm compounding, payment dates, and any guarantees with the contract and a qualified adviser.
Present value of annuity examples
Level payment streams valued with ordinary and due timing.
| Inputs | Output | Note |
|---|---|---|
| $100 yearly for 1 year at 10%, ordinary | Present value $90.91; total payments $100.00 | The single payment is discounted one year. |
| $100 yearly for 1 year at 10%, annuity due | Present value $100.00; total payments $100.00 | The payment is received immediately, so it is not discounted. |
| $1,000 monthly for 1 year at 12%, ordinary | Present value $11,255.08; total payments $12,000.00 | Twelve end-of-month payments at a 1 percent periodic rate. |
How to calculate the present value of an annuity
- Enter the amount of each equal payment.
- Enter the annual interest rate, years, and payments per year.
- Choose Ordinary Annuity for payments at period end or Annuity Due for payments at period start.
- Select Calculate to see the present value and total payments.
- Reset the form before evaluating another scenario.
Present value of annuity FAQ
What is the difference between an ordinary annuity and an annuity due?
An ordinary annuity pays at the end of each period. An annuity due pays at the beginning, so its present value is higher when the interest rate is positive because each cash flow is received sooner.
What payment frequency should I use?
Use 12 for monthly payments, 4 for quarterly payments, and 1 for annual payments. The field is the number of equal payment periods in a year, and it also sets the periodic discount rate.
What happens when the interest rate is zero?
Present value equals the payment amount multiplied by the total number of payments. Timing does not matter because there is no time value of money in that scenario.
Does this include a growing payment?
No. Every payment is assumed equal. For payments that rise at a constant rate, use a growing-annuity model instead of this level-payment formula.
Is this financial advice?
No. Use the present value of annuity calculator for education and planning. Seek professional advice before commuting a pension, settling a lease, or prepaying a loan.