Present Value of Annuity Formula

Present Value of Annuity is the concept that receiving money now is worth receiving the same ammount in the future. Using this logic receiving a lump sum today is worth receive the same overall ammount in payments as it allows you to immediately invest the full sum.  Using the example below of $500 per year at 5% for 10 years, the receiving sum of  $3,860.87 would have the same value to you as receiving $500 per year for 10 years.  If you can currently receive a better interest rate than quoted then it is better to receive the Present Value now and reinvest to make a profit.

 
   
   
   
   
     
       
         
         
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  Use the calculator below to find out the true value of your money now and make the right investment choices.  
     
  Cash Flow Per Period   Present Value of Annuity
  Interest Rate  
  Number of Periods