Present value annuity calculator
Discount a stream of equal payments back to today as an ordinary annuity or annuity due.
What this calculator covers
Use this calculator to convert a future payment stream into the lump sum with the same value today.
The walkthrough keeps payment timing visible so you can compare ordinary annuity cash flows with an annuity due.
Frequently asked questions
- What is the difference between an ordinary annuity and an annuity due?
- An ordinary annuity makes payments at the end of each period, while an annuity due makes payments at the beginning. Because an annuity due delivers each payment one period earlier, its present value is always higher than an equivalent ordinary annuity at the same discount rate.
- What discount rate should I enter?
- Enter the rate that matches your payment period. If payments are monthly and your annual rate is 6%, divide by 12 and enter 0.5% as the periodic rate. Using an annual rate with monthly periods would overstate the discounting.
- How does this differ from a loan payment calculator?
- A loan payment calculator solves for the periodic payment given a present value (the loan amount). This calculator does the opposite: it solves for the present value given a stream of known future payments. Both use the same underlying annuity math but in different directions.
- What does the discount amount represent?
- The discount amount is the difference between the sum of all nominal payments and the present value. It reflects the time value of money — the future payments are worth less today because money received later is less valuable than money in hand now.
Tool
Run the calculation
Result
RESULT · ANNUITY PRESENT VALUE
â„–201
Primary result
$9,434.04
$300.00 received at the end of each period for 36 periods is worth $9,434.04 today when discounted at 0.75% per period.
- Present value
- $9,434.04
- Total payments
- $10,800.00
- Discount amount
- $1,365.96
- Payment timing
- Ordinary annuity
Step-by-step solution
- 1.Use the present value annuity factor for 36 payments discounted at 0.75% per period.
- 2.Adjust the factor upward when payments arrive at the beginning of each period as an annuity due.
- 3.Compare the discounted value of $9,434.04 with the undiscounted payment stream of $10,800.00.
Walkthrough
Visual walkthrough
Present value annuity math discounts each future payment back to today and then adds those discounted pieces together.
01
Map the payment stream
36 payments of $300.00
The annuity schedule defines how many cash flows must be discounted back to the present.
02
Discount each period
0.75% per period
The discount rate lowers the value of payments that arrive later in the schedule.
03
Read today’s value
An annuity due is worth more today because each payment arrives one period earlier than an ordinary annuity.
$9,434.04 present value