# Present Value Annuity Calculator

## What does it do?

This present value annuity calculator works out the present value (PV) of a regular sum of money (Pmt) received at the end of each of n periods, using a discount rate i.

## Formula

The time value of money annuity calculator uses the present value of an annuity formula as shown below:

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

## Instructions

The Excel present value annuity calculator, available for download below, is used to compute the present value by entering details relating to the regular payment, discount rate and the number of periods. The calculator is used as follows: ### Step 1

Enter the regular payment amount (Pmt). The regular payment is the amount received at the end of each period for n periods. The amount must be the same for each period.

### 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).

### Step 4

The present value of an annuity calculator works out the present value (PV). The answer is the value today (beginning of period 1) of an a regular sum of money received at the end of each of n periods, at a discount rate of i. It is the present value of an annuity.