We provide a wide variety of tutorials, techniques, examples, formulas, tables, and calculators all relating to use of annuity formulas in time value of money calculations for accounting and business finance.
The time value of money is simply the idea that as a result of interest (i), the value of a payment today (present value), is not equal to the value of the same payment in the future (future value).
What are Annuities?
An annuity simply refers to a series of equal periodic payments (Pmt) made for a specified number of periods (n). An annuity formula is used to calculate either the future value (FV) or the present value (PV) of the annuity based on an discount rate (i).
In order to be able to add annuity payments from different time periods together, all the payments need to be brought together at the same time period. To do this we need to perform discounting or compounding operations using an annuity formula.
The present value of an annuity payment can be converted into a future value by compounding, and likewise, the future value of an annuity payment can be converted to a present value by discounting.
Quick and straightforward practical tutorials to help you understand the concepts of using annuity formulas to calculate present value, future value in time value of money calculations. A collection of step-by-step lessons covering beginner, intermediate, and advanced topics.
A selection of how-to guides which build on the tutorials and outline ways in which an annuity formula can be used in common time value of money calculations in practice.
- How to calculate lease payments using an annuity formula
- How to calculate a bond price with an annuity formula
Short annuity formula finance problems and solutions examples complement the tutorials and how-to’s and help you apply the time value of money principles and concepts in practice.
- Mortgage loan annuity formula example
- Auto loan payment annuity formula example
- Present value of annuity formula example
Quick guides and cheat sheets for each time value of money annuity formula explaining what the formula is, how its used, and what the equivalent Excel function is.
- Present value of annuity formula
- Future value of growing annuity formula
- Future value of annuity formula
Tables are a common feature used in time value of money annuity formula calculations, they provide a quick method of performing calculations without the need for a financial calculator. We provide downloadable tables in PDF format for the most common functions, including present value, future value, and annuity calculations.
Our simple to use, free to download, Excel annuity formula calculators are available for each time value of money function, including PV, FV, IRR, NPV, and many others.