Annuity Immediate Calculator

Annuity Immediate Calculator

Use this calculator to determine either the Present Value of an Annuity Immediate or the periodic Payment Amount, given the other variables.

Leave blank if calculating Payment Amount.

Leave blank if calculating Present Value.

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What is an Annuity Immediate?

An annuity immediate, also known as an ordinary annuity, is a series of equal payments made at the end of each period over a specified duration. This type of annuity is fundamental in financial planning, particularly for retirement income, loan amortization schedules (from the lender's perspective), and structured settlements.

The key characteristic of an annuity immediate is that payments occur at the end of each period. This contrasts with an annuity due, where payments are made at the beginning of each period.

How the Calculator Works

This calculator can solve for two primary variables related to an annuity immediate:

  • Present Value of Annuity: If you know the periodic payment amount, the interest rate, and the number of periods, the calculator can determine the lump sum amount today that is equivalent to that stream of future payments. This is useful for understanding how much capital is needed to generate a specific income stream.
  • Periodic Payment Amount: If you have a lump sum (Present Value) and want to know what equal payments it can generate over a certain period at a given interest rate, the calculator can determine that payment amount. This is often used in retirement planning to figure out how much income a savings pot can provide.

You should only fill in one of the "Periodic Payment Amount" or "Present Value of Annuity" fields, leaving the other blank for the calculator to solve.

Key Terms Explained

  • Periodic Payment Amount: The fixed amount of money paid or received at the end of each period (e.g., monthly, quarterly, annually).
  • Present Value of Annuity: The current worth of a future stream of payments, discounted back to the present using a specific interest rate.
  • Annual Interest Rate: The nominal annual rate at which the annuity grows or is discounted.
  • Compounding/Payment Frequency: How many times per year the interest is compounded and/or payments are made. This determines the effective interest rate per period and the total number of periods.
  • Number of Years: The total duration over which the annuity payments are made.

Example Calculation

Let's say you want to know the present value of an annuity that pays $1,000 at the end of each month for 10 years, with an annual interest rate of 5% compounded monthly.

  • Periodic Payment Amount: $1,000
  • Present Value of Annuity: (Leave blank)
  • Annual Interest Rate: 5%
  • Compounding/Payment Frequency: Monthly (12 times per year)
  • Number of Years: 10

Using the calculator, you would find the Present Value to be approximately $94,955.26. This means that $94,955.26 invested today at 5% annual interest (compounded monthly) could provide $1,000 per month for 10 years.

Alternatively, if you have $100,000 today and want to know what monthly payment it can generate for 10 years at 5% annual interest compounded monthly:

  • Periodic Payment Amount: (Leave blank)
  • Present Value of Annuity: $100,000
  • Annual Interest Rate: 5%
  • Compounding/Payment Frequency: Monthly (12 times per year)
  • Number of Years: 10

The calculator would show that you could receive approximately $1,055.77 per month for 10 years.

function calculateAnnuityImmediate() { var paymentAmountInput = document.getElementById("paymentAmount").value; var presentValueInput = document.getElementById("presentValue").value; var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value); var compoundingFrequency = parseFloat(document.getElementById("compoundingFrequency").value); var numberOfYears = parseFloat(document.getElementById("numberOfYears").value); var resultDiv = document.getElementById("annuityResult"); // Input validation if (isNaN(annualInterestRate) || annualInterestRate 100) { resultDiv.innerHTML = "Please enter a valid Annual Interest Rate (0-100%)."; return; } if (isNaN(compoundingFrequency) || compoundingFrequency <= 0) { resultDiv.innerHTML = "Please select a valid Compounding/Payment Frequency."; return; } if (isNaN(numberOfYears) || numberOfYears <= 0) { resultDiv.innerHTML = "Please enter a valid Number of Years (greater than 0)."; return; } var paymentAmountProvided = paymentAmountInput !== null && paymentAmountInput.trim() !== ""; var presentValueProvided = presentValueInput !== null && presentValueInput.trim() !== ""; if ((paymentAmountProvided && presentValueProvided) || (!paymentAmountProvided && !presentValueProvided)) { resultDiv.innerHTML = "Please provide EITHER the Periodic Payment Amount OR the Present Value of Annuity, but not both or neither."; return; } var i = (annualInterestRate / 100) / compoundingFrequency; // Interest rate per period var n = numberOfYears * compoundingFrequency; // Total number of periods var calculatedValue; var resultType = ""; if (paymentAmountProvided) { var paymentAmount = parseFloat(paymentAmountInput); if (isNaN(paymentAmount) || paymentAmount <= 0) { resultDiv.innerHTML = "Please enter a valid Periodic Payment Amount (greater than 0)."; return; } // Calculate Present Value (PV) // PV = PMT * [1 – (1 + i)^-n] / i if (i === 0) { // Handle zero interest rate case calculatedValue = paymentAmount * n; } else { calculatedValue = paymentAmount * (1 – Math.pow(1 + i, -n)) / i; } resultType = "Present Value of Annuity"; } else { // presentValueProvided var presentValue = parseFloat(presentValueInput); if (isNaN(presentValue) || presentValue <= 0) { resultDiv.innerHTML = "Please enter a valid Present Value of Annuity (greater than 0)."; return; } // Calculate Payment Amount (PMT) // PMT = PV * i / [1 – (1 + i)^-n] if (i === 0) { // Handle zero interest rate case calculatedValue = presentValue / n; } else { calculatedValue = presentValue * i / (1 – Math.pow(1 + i, -n)); } resultType = "Periodic Payment Amount"; } if (isNaN(calculatedValue)) { resultDiv.innerHTML = "An error occurred during calculation. Please check your inputs."; return; } resultDiv.innerHTML = "

Calculation Result:

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