Annuity Calculator
Two Ways to Value a Stream of Fixed Payments
An annuity is simply a series of equal payments made at regular intervals. The interesting question can run in either direction: given a monthly payment, what will it be worth at some point in the future (future value), or, given that same payment stream, what lump sum today would be equivalent to receiving it (present value)? This calculator handles both, for an ordinary annuity where payments occur at the end of each period.
The Formula
Present Value: PV = PMT × [(1 − (1+r)−n) ÷ r]
PMT is the fixed periodic payment, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the total number of payments (years × 12).
Where Each Mode Applies
- Future value — projecting what a fixed monthly savings or contribution stream (like a workplace retirement plan) grows into by a target date.
- Present value — determining the lump sum needed today to fund a known future payment stream, such as pricing a pension buyout or structured settlement.
- Loan and lease evaluation — the present value calculation is the same math lenders use to price a stream of fixed payments.
$500/Month at 6% Annual Rate
| Years | Future Value | Present Value |
|---|---|---|
| 10 | $81,939.67 | $45,036.73 |
| 20 | $231,020.45 | $69,790.39 |
| 30 | $502,257.52 | $83,395.81 |
Present value grows more slowly than future value at longer horizons because payments far in the future are discounted more heavily back to today's dollars.
How to Use This Calculator
- Choose the mode: Future Value of Annuity or Present Value of Annuity.
- Enter the Monthly Payment amount.
- Enter the Annual Interest Rate.
- Enter the Number of Years the payments run.
- Select Calculate to see the result along with total contributions and interest (in future value mode).
Related Calculations
For a savings plan with an initial lump sum plus contributions, see the Savings Calculator, or check the Investment Calculator for a similar future-value projection.