# Annuity Payment Calculator

## What does it do?

This annuity payment calculator works out the regular sum of money (Pmt) received at the end of each of n periods, when investing a lump sum of money today (PV) using a discount rate i.

## Formula

The calculator uses the present value of an annuity formula and rearranges this to solve for the annuity payment (Pmt).

`Pmt = PV x i / (1 - 1 / (1 + i)n)`

## Instructions

The Excel annuity payment calculator, available for download below, is used to compute the regular sum of money received under an annuity by entering details relating to the amount invested today, discount rate and the number of periods. The calculator is used as follows:

### Step 1

Enter the lump sum amount (PV). This is the amount to be invested today to generate the annuity.

### Step 2

Enter the discount rate (i). The discount rate is the rate used to discount each payment amount back from the end of the period in which is was made, to the beginning of period 1 (today). The rate should be for a period, so for example, if the period is a year, then the rate should be the yearly rate.

### Step 3

Enter the number of periods (n). The number of periods is entered. A period can be any term (month, year etc), but must be consistent with the discount rate provided (see step 2). For example, if the annuity is to be received monthly for the next 10 years, then the number of periods is 120 months.

### Step 4

The annuity payment calculator works out the periodic payment. The answer is the sum of money received (Pmt) at the end of each of n periods, if a lump sum amount (PV) is invested today at a discount rate of i.

The annuity payment calculator is one type of tvm calculator used in time value of money calculations, discover another at the links below.

Notes and major health warnings
Users use this free annuity payment calculator at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a annuity calculator that you might use when considering how to calculate annuity payments. It is purely illustrative of an annuity payments calculator. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this annuity calculator payment, please let us know and we will try to fix it.
Annuity Payment Calculator November 6th, 2016

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