How to use the Annuity Calculator (Present and Future Value)
- Enter the payment made each period.
- Enter the yearly rate, the number of years and how many payments you make per year.
- Choose whether payments are made at the end or at the start of each period.
- Read the future value, present value, total paid and interest earned.
Formula used
With i = rate ÷ payments per year and n = total payments: FV = P × ((1 + i)ⁿ − 1) ÷ i and PV = P × (1 − (1 + i)⁻ⁿ) ÷ i. For an annuity due, multiply both by (1 + i).
Worked example
Here is the Annuity Calculator (Present and Future Value) worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Payment per period | $1,000 |
| Interest or discount rate (per year) | 6 % |
| Number of years | 10 years |
| Payments per year | Monthly |
| Payments are made | At the end of each period (ordinary annuity) |
| Result | |
| Future value | $163,879.35 |
| Present value | $90,073.45 |
| Total payments | $120,000.00 |
| Interest earned (future value − payments) | $43,879.35 |
Future and present value by number of years
For the default 1,000 a month at 6% a year, paid at the end of each month.
| Number of years | Future value | Present value |
|---|---|---|
| 5 years | $69,770.03 | $51,725.56 |
| 10 years | $163,879.35 | $90,073.45 |
| 15 years | $290,818.71 | $118,503.51 |
| 20 years | $462,040.90 | $139,580.77 |
| 30 years | $1,004,515.04 | $166,791.61 |
Future value of regular payments
With $1,000 paid at the end of every month for 10 years at 6% a year, there are 120 payments and the monthly rate is 0.5%. The future value is $163,879.35. You paid in $120,000, so $43,879.35 of that is interest.
The formula is FV = P × ((1 + i)^n − 1) ÷ i, where i is the rate per period and n the number of payments. It is the same arithmetic as a monthly SIP or a regular savings plan.
Present value of a stream of payments
The present value of the same stream is $90,073.45. That is the single sum you would need today, earning 6% a year, to be able to pay $1,000 a month for ten years. It is also the amount a lender would advance against that stream of repayments.
The formula is PV = P × (1 − (1 + i)^−n) ÷ i. Use present value to compare a lump sum with a stream of payments, for example when choosing between a lump sum and a regular pension.
Ordinary annuity versus annuity due
If payments are made at the start of each period, each one earns interest for one extra period. The future value rises to $164,698.74 from $163,879.35, and the present value to $90,523.82. Rent and insurance premiums are often paid in advance, while loan repayments are usually in arrears.
Payment frequency matters too. Paying $12,000 once a year at the end of the year gives $158,169.54 after 10 years, less than the $163,879.35 from the same $12,000 paid monthly, because monthly payments start earning earlier.
A note on products called annuities
In everyday use, an annuity is also an insurance or pension product that turns a lump sum into a regular income. Those products come with their own charges, guarantees and tax rules, which this simple calculator does not model.
The result assumes a constant rate and fixed payments. For loans with a changing balance, see the loan and EMI calculators on this site.
Frequently asked questions
What is an annuity?
A series of equal payments at regular intervals, such as monthly savings or loan repayments.
What is the difference between present and future value?
Future value is what the payments grow to. Present value is what the whole stream is worth today.
What is an annuity due?
An annuity where payments are made at the start of each period, so it is worth more than an ordinary annuity.
Does the rate stay the same?
Yes. The calculator assumes a constant rate, which real investments rarely deliver.
Is the future value the same as a SIP?
The arithmetic is the same as a monthly SIP at a steady return, as in the SIP calculator, with payments made at the end of each month.
Can I use it for loan repayments?
Present value gives the loan amount that a fixed payment supports at a given rate, so yes, as a check on the EMI calculator.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.