Annuity Calculator

An annuity is a series of equal periodic payments made over time. Ordinary annuities pay at the end of each period (like bond coupons). Annuities-due pay at the beginning (like rent). The timing affects present and future value.

PV of an annuity tells you the lump sum today that is equivalent to receiving the payment stream in the future. It is used for valuing bonds, pension obligations, lease liabilities, and lottery payouts.

FV of an annuity shows how much a series of regular contributions will grow to. It is used for retirement savings planning, college savings, and any goal where you make regular contributions over time.

An ordinary annuity makes payments at the end of each period. An annuity-due makes payments at the beginning (like rent paid on the 1st of the month). Annuity-due has slightly higher present and future values.

Insurance annuity products are contracts that convert a lump sum into a stream of payments. They come as immediate or deferred annuities and can be fixed, variable, or indexed. They are primarily retirement income tools, not the same as the mathematical annuity formula.

A perpetuity is an annuity that pays forever. Its present value = PMT / r. If you receive $1,000 per year forever at a 5% discount rate, it is worth $1,000 / 0.05 = $20,000 today. Real examples include certain preferred stocks and consol bonds.