The present value is an important concept that can help you determine how much money you need to invest right now if you want to reach your financial goal of having certain amount of money in the future using an ordinary annuity.

Knowing the present value will also help you determine which investment strategy is more profitable for you. For example, the total interest you are going to receive will be a lot less, if you choose to invest $200 each month for 10 years instead of making a one time investment of $24,000 right now. However $200 today is more valuable than $200 next year due to inflation, so in a way you are putting in less and less money into your annuity over time.

Neither strategy is better or worse than the other, it all depends on your financial situation.

The formula for determining the present value of a ordinary annuity is defined as:

\(A_{present}\): The lump sum you need to invest right now

\(P\): payment at the end of each period

\(n\): number of payments you want to make per year (choose between 1, 3, 6 or 12)

\(r\): the annual interest rate of the annity

\(t\): How many years do you want to contribute to your annuity?

Present Value

Use this calculator to find out how much money you need to invest right now to reach your financial goal instead of spreading your payment over a number of years.

payment at the end of each period

\(P\)

\($\)

number of payments you want to make per year (choose between 1, 3, 6 or 12)

\(n\)

the annual interest rate of the annity

\(r\)

\(\%\)

How many years do you want to contribute to your annuity?

\(t\)

\(years\)

Please note, that all calculators provided are for informational and educational purposes ONLY, and should NOT be taken as professional financial advice.

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