Annuity Calculator
The Annuity Calculator finds the present value of a stream of equal monthly payments — how much a future series of payments is worth in today's money. Enter the monthly payment, annual interest rate, and number of years. The formula used is: PV = PMT × [(1 − (1 + r)⁻ⁿ) ÷ r], where r is the monthly rate and n is the number of months.
Formula
PV = PMT × [(1 − (1 + r)⁻ⁿ) ÷ r]
- The Annuity Calculator updates instantly when you change any value.
- Formula: PV = PMT × [(1 − (1 + r)⁻ⁿ) ÷ r]
- Input definitions: • Monthly Payment: the equal amount paid each month • Annual Rate %: the yearly discount rate (divided by 12 for the monthly rate r) • Years: the length of the payment stream (× 12 for the number of months n)
- Present value answers: what single amount today is equivalent to receiving these payments over time?
- A higher discount rate lowers the present value, because future money is worth less today.
Example Calculation
Inputs
- Monthly Payment (PKR): 100000
- Annual Rate %: 5
- Years: 10
Receiving PKR 100,000 a month for 10 years, discounted at 5% annually, has a present value of about PKR 9,428,135 — less than the PKR 12,000,000 of nominal payments because of the time value of money.
Frequently asked questions
What is the present value of an annuity?
It is the value today of a series of equal future payments, discounted at a chosen interest rate to reflect the time value of money.
Why is the present value less than the total payments?
Money received later is worth less than money today, so discounting future payments reduces their combined value.
What rate should I enter?
Enter the annual discount or interest rate as a plain number (for example 5 for 5%). It is converted to a monthly rate internally.
Is this an ordinary annuity?
Yes. Payments are assumed to occur at the end of each month.
When is this useful?
Use it to value pension payouts, lottery instalments, lease payments, or any stream of equal future cash flows.