The purpose of the present value annuity tables is to make it possible to carry out annuity calculations without the use of a financial calculator.
They provide the value now of 1 received at the end of each period for n periods at a discount rate of i%.
The present value of an annuity formula is:
PV = Pmt x (1 - 1 / (1 + i)n) / i
Present value annuity tables are used to provide a solution for the part of the present value of an annuity formula shown in red, this is sometimes referred to as the present value annuity factor.
PV = Pmt x Present value annuity factor
Present Value Annuity Table Example
What is the present value of 5,000 received at the end of each year for 12 years, if the discount rate is 7%?
Pmt = 5,000 n = 12 i = 7% PV = Pmt x (1 - 1 / (1 + i)n) / i PV = 5,000 x (1 - 1 / (1 + 7%)12) / 7% PV = 5,000 x Present value of annuity factor for n = 12, i = 7% PV = 5,000 x 7.9427 PV = 39,713.50
The present value annuity factor of 7.9427, is found using the tables by looking along the row for n = 12, until reaching the column for i = 7%, as shown in the preview below.
Present Value Annuity Tables Download
The present value of annuity table is available for download in PDF format by following the link below.
Present value annuity tables are one of many time value of money tables, discover another at the links below.
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