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Page History: Annuity Calculations

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Page Revision: Tue, Jun 05, 2012, 10:56 AM


Overview

This article explains various means of calculating the payment amount of an annuity given the present value and interest rate.

Solutions

In Excel



In Visual Basic

Function AnnuityToPvRatio(i As Double, N As Integer) As Double

    Dim fp As Double
    fp = FutureToPvRatio(i, N)
    
    AnnuityToPvRatio = (i * fp) / (fp - 1)

End Function
Function FutureToPvRatio(i As Double, N As Integer) As Double

    FutureToPvRatio = (1 + i) ^ N

End Function

Manual Calculation

         i (1+i)^N     
A/P = ---------------    
        (1+i)^N - 1


         i (F/P)      
     = -------------    
        (F/P) - 1

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