What Is an Annuity Table and How Do You Read One?

The following present value of annuity table ($1 per period at r% for n periods) will also help you calculate the present value of your ordinary annuity. Present value present value of annuity table calculations can be complicated to model in spreadsheets because they involve the compounding of interest, which means the interest on your money earns interest.

• Multiply the number in that cell by the amount of money you get each period.
• The dollar received at the end of year 3 must be discounted back 3 periods; the dollar received at the end of year 2 must be discounted back 2 periods; and so forth.
• We can differentiate annuities even further based on whether they are deferred or immediate annuities.
• Annuity providers base income benefits on an annuitant’s life expectancy, which they determine using your age and gender.
• The present value annuity factor is used to calculate the present value of future one dollar cash flows.

An annuity table is a tool used mostly by accounting, insurance or other financial professionals to determine the present value of an annuity. An annuity table uses the discount rate and number of period for payment to give you an appropriate factor. An annuity table aids in finding out the present and future values of a sequence of payments made or received at regular intervals.

Example: Calculating the Annuity Payment, or the Periodic Rent

A lottery winner could use an annuity table to determine whether it makes more financial sense to take his lottery winnings as a lump-sum payment today or as a series of payments over many years. More commonly, annuities are a type of investment used to provide individuals with a steady income in retirement. Present value tables aren’t as precise as manual calculations or financial software programs because the tables contain a limited set of interest rates and payments.

This is a stream of payments that occur in the future, stated in terms of nominal, or today’s, dollars. The size of the premium depends on a number of factors, including the interest rate, the length of the payment period, and the amount of money you want to receive each month. Are you considering taking out an annuity but aren’t sure how much it will be worth in the future?

Annuity Table for an Ordinary Annuity

At the very least, you should invest in your 401, provided your company offers one. Find out the projected value of your 401 by the time you retire with our free 401 calculator.

As a starting point, let’s have a brief overview of the specific terms you can find in our calculator. Our videos are quick, clean, and to the point, so you can learn Excel in less time, and easily review key topics when needed. The user should use information provided by any tools or material at his or her own discretion, as no warranty is provided. Harold Averkamp has worked as a university accounting instructor, accountant, and consultant for more than 25 years.