Enter a periodic payment, interest rate, and term to find what a stream of equal future payments is worth today.
How to Use the Present Value of an Annuity Calculator
Enter the payment per period, the annual interest rate, how many payments happen each year, and the number of years, then pick Ordinary Annuity or Annuity Due depending on whether each payment lands at the end or the start of its period.
A pension paying $500 a month is worth less than $500 times the number of months you'll receive it — money that arrives later is worth less today, and this calculator collapses that whole future stream into one number: what it's worth right now, at your stated discount rate.
The Formula
For an ordinary annuity, where each payment arrives at the end of its period:
PV = PMT × (1 − (1 + r)⁻ⁿ) ÷ rwhere r is the interest rate per period (annual rate ÷ payments per year) and n is the total number of payments (years × payments per year). If r is zero, the calculator falls back to PV = PMT × n — pure arithmetic, no discounting, since a 0% rate means a dollar next year is worth exactly a dollar today.
An annuity due — rent paid on the first of the month, for instance, rather than the last — shifts every payment one period earlier, which is worth slightly more:
PV(due) = PV(ordinary) × (1 + r)Ordinary vs. Due Isn't Just Semantics
Loan payments, bond coupons, and most retirement annuities pay in arrears — ordinary. Rent, insurance premiums, and lease payments usually pay in advance — due. Mixing them up in an actual valuation understates or overstates the number by a full period's worth of discounting, which compounds into a meaningful gap over a 20- or 30-year annuity even though the toggle looks like a minor detail.
Run the numbers with 6% and monthly payments over ten years and the due version comes out half a percent higher than ordinary — not dramatic on paper, but on a large pension buyout or structured settlement that difference is real money, and it's exactly why the two get valued separately instead of being treated as interchangeable.
Where This Shows Up
Structured settlements, pension buyout offers, and lottery lump-sum comparisons all reduce to this same question: what's a fixed future income stream worth today? Change the discount rate and watch the present value move — a higher rate always shrinks it, because future dollars get discounted harder the higher your required return.
Worked out: $500 a month for ten years at 6%, ordinary, comes to roughly $45,037 today. Push the rate to 8% with everything else unchanged and the present value drops to around $41,200 — same payments, same term, meaningfully less money, purely because a higher rate discounts every one of those 120 future payments more aggressively.
A Mortgage Is the Same Shape, Backwards
A lender pricing a loan runs this exact calculation in reverse: fix the monthly payment a borrower can afford, fix a rate, and the loan amount they can qualify for is the present value of that payment stream. Enter your payment, rate, and term here and the number that comes out is, functionally, the size of loan those payments would support — useful context even outside the annuity framing this tool is built around.