Calculate Annual Rate Annuity
Given the present value, payment and time periods remaining on an annuity you can calculate its rate of return.
Please fix these errors:
Interpretation:
An annuity that is worth $#PresentValue# today, that lasts #TimeInYear# time periods and pays a constant $#Payment# over each time period has an interest rate of #RateValue#.With a #RateValue# interest rate, the present value of the payments is lower
than the future value. Thus, the $#Payment# you will be receiving in orderly
payments is worth less today than it will be tomorrow. This condition is
consistent with the time value of money, which states that with time money
appreciates rather than depreciates. In other words, if you invest the
$#Payment# payment, its value over #TimeInYear# time periods will increase.
With a #RateValue# interest rate, the present value of the payments is higher
than the future value. Thus, the $#Payment# you will be receiving in orderly
payments is worth more today that it will be tomorrow. This is a condition
inconsistent with the premise underlying the time value of money, which states
that with time money should appreciate rather than depreciate in value. With a
negative interest rate, however, money depreciates rather than appreciates in
value. In other words, if you invest the $#Payment# payment at a negative
interest rate, the value of the money over #TimeInYear# time periods will
decrease.
OOPS!!!
Your rate is too small for our calculators. This means that you need either to decrease your present value, change your payment, or change your time frame.
Try again.
Related Links:
- Understanding the Time Value of Money - Find out how time really is money by learning to calculate present and future value.
- Anything but Ordinary: Calculating the Present and Future Value of Annuities - Learn how to calculate the present and future values of accumulated cash flows.