Net present value and the profitability index are helpful tools that allow investors and companies make decisions about where to allocate their money.

How to calculate the present value of an ordinary annuity Present value of an annuity refers to how much money must be invested today in order to guarantee the payout you want in the future.

Calculating the interest rate using the present value formula can at first seem impossible. However, with a little math and some common sense, anyone can quickly calculate an investment's interest ...

When planning for retirement, you need to account for the value of any annuities that you own. Trouble is, there’s not just one value of an annuity—there are two: present value and future ...

Find out how the annuity formula works and how to calculate present and future value. Get a simple breakdown of key concepts.

The interest rate can also be a discount rate, such as the current rate of inflation; in this case, the annuity formula discounts a series of future payments to calculate their present value.

Present value is the amount of money needed to generate a specific return. Future value is the balance an account will accrue over time.

The present value interest factor of an annuity is calculated to compare the real value of a lump sum payment today and the same amount of money paid over time.

Here’s what you need to know about two terms related to annuities — present value and future value. Present value of an annuity vs. future value of an annuity: What’s the di ...