Present value of ordinary annuity: Valuing Equal Payments Received at Period End
An ordinary annuity values a sequence of equal end-of-period payments. Discounting each payment recognizes that a payment received later has a different present value.
Use the Present value of ordinary annuity Calculator to enter your own figures and compare the result with the worked example below.
Present value of ordinary annuity formula
PV = PMT × (1 − (1+r)^(-n)) ÷ r
Worked example
| Item | Example value |
|---|---|
| Payment per period | 100 USD |
| Discount rate per period | 1 % |
| Number of periods | 12 periods |
| Present value of ordinary annuity | 1,125.507747 USD |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Payments beginning immediately require a timing adjustment. Do not mix a monthly payment with an annual rate in the per-period field.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see Investor.gov: Introduction to investing. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
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