# Annuity Payment Calculator

## What does it do?

This annuity payment calculator works out the regular sum of money (Pmt) received at the end of each of n periods, when investing a lump sum of money today (PV) using a discount rate i.

## Formula

The calculator uses the present value of an annuity formula and rearranges this to solve for the annuity payment (Pmt).

`Pmt = PV x i / (1 - 1 / (1 + i)n)`

## Instructions

The Excel annuity payment calculator, available for download below, is used to compute the regular sum of money received under an annuity by entering details relating to the amount invested today, discount rate and the number of periods. The calculator is used as follows: ### Step 1

Enter the lump sum amount (PV). This is the amount to be invested today to generate the annuity.

### Step 2

Enter the discount rate (i). The discount rate is the rate used to discount each payment amount back from the end of the period in which is was made, to the beginning of period 1 (today). The rate should be for a period, so for example, if the period is a year, then the rate should be the yearly rate.

### Step 3

Enter the number of periods (n). The number of periods is entered. A period can be any term (month, year etc), but must be consistent with the discount rate provided (see step 2). For example, if the annuity is to be received monthly for the next 10 years, then the number of periods is 120 months.

### Step 4

The annuity payment calculator works out the periodic payment. The answer is the sum of money received (Pmt) at the end of each of n periods, if a lump sum amount (PV) is invested today at a discount rate of i.