cash flows to be received in the future. Use this calculator to figure out what a future income stream is worth in today's dollars – whether it is from an annuity, business, real estate, or other assets.
If you want to compute today's present value of a single lump sum payment (instead of series of payments) in the future than try our present value calculator here.
If you're looking for an investment strategy that goes beyond "buy and hold" while controlling risk and requiring as little as 30 minutes a month to manage, this is the answer. It’s so good I wish I had built it myself. Take back control of your portfolio and start getting results today.
Which would you prefer: $10,000 today or $10,000 received in annual $1,000 installments over the course of 10 years? Instinctively, you probably would choose to receive money right now rather than later.
And yes, you should choose to receive money right now – but for more reasons than “I just couldn't wait.”
That's because $10,000 today is worth more than $10,000 received over the course of time. In other words, the purchasing power of your money decreases in the future.
The Present Value of Annuity Calculator applies a time value of money formula used for measuring the current value of a stream of equal payments at the end of future periods. This is also called discounting.
The present value of a future cash-flow represents the amount of money today, which, if invested at a particular interest rate, will grow to the amount of the sum of the future cash flows at that time in the future.
Below you will find a common present value of annuity calculation. Studying this formula can help you understand how the present value of annuity works. For example, you'll find that the higher the interest rate, the lower the present value because the greater the discounting.
C = Cash flow per period (payment amount)
i = Interest rate
n = Number of payments (in this calculator, derived from the payment interval and number of years)
The most common uses for the Present Value of Annuity Calculator include calculating the cash value of a court settlement, retirement funding needs, or loan payments.
For example, a court settlement might entitle the recipient to $2,000 per month for 30 years, but the receiving party may be uncomfortable getting paid over time and request a cash settlement. The equivalent value would then be determined by using the present value of annuity formula. The result will be a present value cash settlement that will be less than the sum total of all the future payments because of discounting (time value of money).
Real estate investors also use the Present Value of Annuity Calculator when buying and selling mortgages. The mortgage represents a future payment stream combining interest and principal that can be discounted back to a present cash value to allow the investor to know how much that mortgage is worth on a mathematical basis. This shows the investor whether the price he is paying is above or below expected value.
Present value calculations can be complicated to model in spreadsheets because they involve the compounding of interest, which means the interest on your money earns interest. Fortunately, our present value annuity calculator solves these problems for you by converting all the math headaches into point and click simplicity. I hope it helps you make smarter financial decisions.
Discover the scientific investment process Todd developed during his hedge fund days that he still uses to manage his own money today. It’s all simplified for you in this turn-key system that takes just 30 minutes per month.
Expectancy Wealth PlanningClick Below To Learn How To.
Disclaimer: Each calculator on this web site is believed to be accurate. However no guarantee is made to accuracy and the publisher specifically disclaims any and all liability arising from the use of this or any other calculator on this web site. Use at your own risk and verify all results with an appropriate financial professional before taking action. The information contained on this web site is the opinion of the individual authors based on their personal observation, research, and years of experience. The publisher and its authors are not registered investment advisers, attorneys, CPA’s or other financial service professionals and do not render legal, tax, accounting, investment advice or other professional services. The information offered by this web site is general education only. Because each individual’s factual situation is different the reader should seek his or her own personal adviser. Neither the author nor the publisher assumes any liability or responsibility for any errors or omissions and shall have neither liability nor responsibility to any person or entity with respect to damage caused or alleged to be caused directly or indirectly by the information contained on this site. Use at your own risk. Additionally, this website may receive financial compensation from the companies mentioned through advertising, affiliate programs or otherwise. Rates and offers from advertisers shown on this website change frequently, sometimes without notice. While we strive to maintain timely and accurate information, offer details may be out of date. Visitors should thus verify the terms of any such offers prior to participating in them. The author and its publisher disclaim responsibility for updating information and disclaim responsibility for third-party content, products, and services including when accessed through hyperlinks and/or advertisements on this site.
We’ll email you a screen print of the calculator you just completed, exactly as it appears on your screen. We don’t save any of your data: it’s just an image. You can unsubscribe whenever you want.
