Present Value of an Annuity

Instructions: Familiarize yourself with the following terms. Be certain that you know the definition of each term and where it corresponds in the Present Value of Annuity.

P = R [ 1-(1+i)^-n/ i]

P is the present annuity value.

The accumulated value is the money right now. It's the money you have earned so far.

R = amount of money.

This is the amount of money paid at the end of each period.

i = the rate or r/m.

This is the interest the account earns per period.

m = conversion periods.

This is the number of conversion periods per year.

r = the rate of interest.

This is the interest the account per year.

n = m*t = pay periods.

This is the total number of times one has put money into the account, t = the number of years.

Incremental Calculator
Calculator
Intro PV of Annuity
Chapter 5