Present Value of an Ordinary Annuity

 An Annuity is a series of equal cash flow over a period of time. The Present Value of an Ordinary Annuity is defined as the total value of the series of equal cash flow discounting compound interests.



Formula of Present Value of an Ordinary Annuity

PV = A * ((1-(1/((1+r)^n)))/r)

FVn is the Future Value after a specific period
  • PV is Present Value
  • r is the interest rate
  • n is the period. For example 5 years.
  • A is the Annuity amount
You may want to bring up the Present Value.xls spreadsheet and refer to the Worksheet Present Value (Cash Flow).

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Present Value of a Perpetuity

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