Economics
Annuity present value
Annuity present value is today's equivalent of a future amount or payment stream after discounting.
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P = A(1 − (1 + i)⁻ⁿ) / i
- 01Given
- 02Calculation
- 03Answer
What it means
The present value of an annuity is today's equivalent of a stream of equal future payments discounted at a chosen rate.
How it works and where it is used
This financial-mathematics calculation is used to value loans, leases, installment contracts, pensions, and investment projects.