Present value of annuity calculator
Helps compare a fixed income stream with a lump sum today, such as a settlement, rent or pension.
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How to use it
- Enter payment per period, annual discount rate, term, payment frequency and payment timing.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
i = r/n, N = years × n. PV = PMT × (1 − (1+i)^−N) / i, multiplied by (1+i) for start-of-period payments. At 0%: PMT × N.
Example
Inputs: Payment per period = 1,000 your currency, Annual discount rate = 5 %, Term = 10 years, Payment frequency = Annually, Payment timing = End of each period. Result: Present value: 7,721.73; Sum of payments: 10,000.00; Discount: 2,278.27.
Limits and caveats
- Assumes equal payments and a fixed discount rate.
- Growing payments and the risk of non-payment are not modelled.
Questions about this tool
Should I take a lump sum or monthly payments?
If the lump sum offered beats the present value of the payments at a realistic discount rate, it is worth more.
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, like rent, pays at the start and is worth more today.
What discount rate should I use?
The return you could realistically earn at similar risk over the same term.