Equal Payment Present Value Calculator

About this calculator

The present value of an ordinary annuity answers a core finance question: what is a stream of equal future payments worth in today’s money, given a discount rate? The formula is PV = PMT × [1 − (1+r)⁻ⁿ] / r, where PMT is the periodic payment, r is the periodic interest (discount) rate, and n is the number of payments — it works because money received later is worth less than money received now, and this formula compresses every future payment’s diminished value into a single lump sum.

This is the exact math behind valuing a loan, a lease, or a bond’s coupon payments, and it’s what lets a lender determine how much principal a borrower can be given today in exchange for a promised stream of equal payments at a set interest rate. Retirement planners use the same formula in reverse to figure out how large a lump sum is needed today to fund a fixed monthly pension-style payout for a given number of years, and it underlies how structured settlements and lottery lump-sum buyouts are priced.