Calculate the future and present value of an annuity — a stream of equal payments — given the payment, interest rate, term, and frequency. Supports ordinary annuities and annuities-due.
Future & present value
An annuity is a series of equal payments made at regular intervals. Its future value is what the payment stream grows to by the end of the term (useful for savings goals), while its present value is what that future stream is worth in today's dollars (useful for valuing a pension or settlement). An ordinary annuity pays at the end of each period; an annuity-due pays at the start, so each payment compounds one extra period and produces slightly larger values.
For example, saving $500 a month for 20 years at a 6% annual rate (compounded monthly) grows to a future value of about $231,000, of which $120,000 is your contributions and the rest is interest. The present value of that same stream is about $69,800. Annuities underpin retirement income, structured settlements, lottery payouts, and loan amortization.
What your stream of payments grows into by the end — the savings-goal view of an annuity.
What the future payment stream is worth today — used to value pensions, settlements, and payouts.
Ordinary pays at period end; due pays at the start. Annuity-due values are higher by one period's growth.