Navigation

	Home Page
	Index
	All Pages

Quick Search

Advanced Search »

Contributor Links

	Create a new Page
	Administration
	File Management
	Login/Logout
	Your Profile

Other Wiki Sections

Software

Page History: Annuity Calculations

Compare Page Revisions

« Older Revision - Back to Page History - Newer Revision »

Page Revision: Tue, Jun 27, 2023, 5:01 AM

Overview¶

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

IMPORTANT NOTE REGARDING INTEREST RATES AND APR

1. In the following formulas, the interest rate is the PERIODIC rate. Thus, if N is in months, then the interest rate should be PER MONTH.

2. Banks typically calculate APR as COMPOUNDED YEARLY. Thus if N is in months, then the interest rate you use should be APR/12.

Solutions¶

In Excel¶

Annuity Calculation 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

        
Solving for N,

     -log(1 - PI/A)
N = ----------------
       log(1 + I)

Jasinski Technical Wiki