💰 Annuity Calculator
By ToolNimba Finance Team · Reviewed by ToolNimba Editorial Review, personal finance content · Updated 2026-06-19
This calculator gives an estimate only and is not financial advice. It assumes a constant payment, a constant rate per period and that the rate compounds once per period. Real annuity products, pensions and insurance contracts add fees, taxes, mortality assumptions and surrender charges that change the outcome. Confirm any figure with the product provider and speak to a qualified adviser before making a decision.
An annuity is a series of equal payments made at regular intervals, such as a monthly pension, a savings deposit, or a loan repayment. This calculator works out two things for you: the present value (what that whole stream of future payments is worth in today money) and the future value (what it grows to by the end). Enter the payment, the interest rate per period and the number of periods, then choose whether payments fall at the end of each period (an ordinary annuity) or the start (an annuity due).
What is the Annuity Calculator?
An annuity is any sequence of equal cash flows spaced evenly in time. The two questions people ask about an annuity are mirror images of each other. Present value asks: if I am promised this stream of payments, what single lump sum today is equal to it, given that money can earn interest? Future value asks: if I make these payments and they earn interest, how much will I have accumulated at the end? Both depend on the rate per period (r) and the number of periods (n).
For an ordinary annuity, where each payment lands at the end of its period, present value is PV = PMT x (1 - (1+r)^-n) / r and future value is FV = PMT x ((1+r)^n - 1) / r. The PV formula discounts each future payment back to today, and the FV formula compounds each payment forward to the final date. The two are linked: FV = PV x (1+r)^n, because growing the present value forward over n periods must land on the future value.
An annuity due is the same stream shifted so every payment happens at the start of its period instead of the end. Each payment therefore earns interest (or is discounted) for one extra period, so both the present value and the future value are simply the ordinary-annuity result multiplied by (1+r). Rents, leases and insurance premiums are usually annuities due, since you pay at the beginning. Pensions, bond coupons and most loan repayments are ordinary annuities, paid at the end. Getting the timing right matters: at a 5% rate the difference is exactly 5% on the whole figure.
When to use it
- Working out the lump sum a pension or settlement offer is worth today before you accept it.
- Estimating how much a regular savings or retirement contribution will grow to over time.
- Comparing a stream of future payments against a one-time cash offer on the same terms.
- Pricing a lease, rent or insurance premium that is paid at the start of each period as an annuity due.
How to use the Annuity Calculator
- Enter the payment made each period (for example each month or each year).
- Enter the interest rate per period as a percent (annual rate divided by the number of periods per year).
- Enter the total number of periods.
- Choose ordinary annuity (payment at period end) or annuity due (payment at period start).
- Read off the present value, the future value, the total paid in and the interest.
Formula & method
Worked examples
A $1,000 payment every period for 10 periods at 5% per period, ordinary annuity.
- r = 5 / 100 = 0.05, n = 10, PMT = 1000
- (1 + r)^n = 1.05^10 = 1.628895
- (1 + r)^-n = 1 / 1.628895 = 0.613913
- PV = 1000 x (1 - 0.613913) / 0.05 = 1000 x 0.386087 / 0.05 = 7,721.73
- FV = 1000 x (1.628895 - 1) / 0.05 = 1000 x 0.628895 / 0.05 = 12,577.89
Result: PV ≈ $7,721.73, FV ≈ $12,577.89 (total paid in $10,000)
A $500 payment every period for 24 periods at 1% per period, annuity due.
- r = 1 / 100 = 0.01, n = 24, PMT = 500
- (1 + r)^n = 1.01^24 = 1.269735, (1 + r)^-n = 0.787566
- Ordinary PV = 500 x (1 - 0.787566) / 0.01 = 10,621.69
- Ordinary FV = 500 x (1.269735 - 1) / 0.01 = 13,486.73
- Annuity due multiplies each by (1 + r) = 1.01
- PV due = 10,621.69 x 1.01 = 10,727.91, FV due = 13,486.73 x 1.01 = 13,621.60
Result: PV ≈ $10,727.91, FV ≈ $13,621.60 (total paid in $12,000)
Present and future value of a $1,000 ordinary annuity at 5% per period
| Periods (n) | Present value | Future value | Total paid in |
|---|---|---|---|
| 5 | $4,329.48 | $5,525.63 | $5,000 |
| 10 | $7,721.73 | $12,577.89 | $10,000 |
| 15 | $10,379.66 | $21,578.56 | $15,000 |
| 20 | $12,462.21 | $33,065.95 | $20,000 |
| 30 | $15,372.45 | $66,438.85 | $30,000 |
Common mistakes to avoid
- Using an annual rate with monthly payments. The rate must match the payment period. If payments are monthly, use the monthly rate (annual rate divided by 12), and set n to the number of months. Mixing an annual rate with a monthly count overstates the result badly.
- Confusing ordinary annuity with annuity due. An ordinary annuity pays at the end of each period, an annuity due pays at the start. The due version is worth (1 + r) times more because each payment sits and earns for one extra period. Pick the wrong type and every figure is off by the rate.
- Mixing up present value and future value. Present value is what the stream is worth today, future value is what it grows to at the end. They differ by a factor of (1 + r)^n. Comparing a lump sum offered today against a future value is an apples-to-oranges error.
- Forgetting fees, taxes and inflation. A textbook annuity ignores product fees, income tax on the payments and the fact that inflation erodes the buying power of fixed payments over time. A nominal future value can look large while its real value is much smaller.
Glossary
- Annuity
- A series of equal payments made at regular, evenly spaced intervals.
- Present value (PV)
- The single lump sum today that is equivalent to a future stream of payments, given an interest rate.
- Future value (FV)
- The total amount the payment stream grows to by the end, after earning interest each period.
- Ordinary annuity
- An annuity whose payments occur at the end of each period, such as a bond coupon or loan repayment.
- Annuity due
- An annuity whose payments occur at the start of each period, such as rent or an insurance premium. Worth (1 + r) times an ordinary annuity.
- Rate per period (r)
- The interest rate for one payment interval, equal to the annual rate divided by the number of periods per year.
Frequently asked questions
What is the difference between present value and future value of an annuity?
Present value is what the whole stream of payments is worth in today money, found by discounting each payment back to now. Future value is what those payments grow to by the end, found by compounding each one forward. They are linked by FV = PV x (1 + r)^n, so the future value is always the larger figure when the rate is positive.
How do I calculate the present value of an annuity?
Use PV = PMT x (1 - (1 + r)^-n) / r, where PMT is the payment per period, r is the rate per period and n is the number of periods. This calculator applies the formula for you as soon as you enter the three inputs, and it adjusts automatically if you choose annuity due.
What is an ordinary annuity versus an annuity due?
An ordinary annuity pays at the end of each period (loans, bond coupons, most pensions). An annuity due pays at the start of each period (rent, leases, many insurance premiums). Because every payment in an annuity due earns interest for one extra period, its present and future values are both (1 + r) times those of an ordinary annuity.
What rate should I enter?
Enter the rate for one payment period, not the annual rate, unless the payments are annual. If you receive monthly payments and the annual rate is 6%, use 0.5% per period (6 divided by 12) and set the number of periods to the number of months.
Does this calculator handle a zero interest rate?
Yes. When the rate is 0, there is no discounting or compounding, so both the present value and the future value simply equal the payment multiplied by the number of periods. The calculator handles this special case so you never get a divide-by-zero error.
Is an annuity calculation the same as a loan payment?
They use the same present-value-of-an-annuity relationship. A loan is an annuity where the loan amount is the present value and the formula is rearranged to solve for the payment instead. So this tool and a loan EMI calculator share the same underlying math, viewed from different angles.
Sources
- Present Value of an Annuity: Meaning, Formula, and Example , Investopedia
- Future Value of an Annuity: What Is It, Formula, and Calculation , Investopedia