Present value of an annuity for n payment periods
Description
An annuity is a series of equal payments or receipts that occur at evenly spaced intervals. Leases and rental payments are examples. The payments or receipts occur at the end of each period for an ordinary annuity while they occur at the beginning of each period for an annuity due.
The present value of an annuity (PVA) formula has four variables.
Variables
| PVA | Present value (dimensionless) |
| A | The value of the individual payments in each compounding period (dimensionless) |
| i | The discount rate, or the interest rate at which the amount will be compounded each period (dimensionless) |
| n | The number of periods (dimensionless) |