ANNUITY

C A LC U T TA I N S T I T U T E O F T E C H N O LO G Y
PRESENTED BY :

AFRIDE LASKAR

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CONTENT
WHAT IS ANNUITY?
PRESENT VALUE (PV) OF AN ANNUITY.

CALCULATION PV OF AN ANNUITY

FUTURE VALUE (FV) OF AN ANNUITY

CALCULATION FV OF AN ANNUITY

SUMMARY

CALCULATION
W H AT I S
ANNUITY?
Essentially a series of fixed payments.

Required from a person or paid to a

person at a specified frequency over the
course of a fixed time period.

Most common payment frequencies are

yearly, semi-annually , quarterly &
monthly.

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P R E S E N T VA LU E
(PV) OF AN
ANNUITY
Current value of a set of cash flows in the
future.

Given a specified rate of return or

discount rate.

Future cash flows are discounted at the

discount rate.

Higher the discount rate, the lower the

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present value of annuity

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C A L C U L AT I O N
(PV) OF AN
ANNUITY
Mathematically,

PV of an Annuity = C* [1-(1+i)^n ]/i

where,

C = Cash flow per period

i = Interest rate

n = Number of payments

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F U T U R E VA LU E
(FV) OF AN
ANNUITY
Value of a group of payments at a specified
date in future.

Measures how much a person would have in

the future given a specified rate of return or
discount rate.

Future cash flow of annuity grow at the

discount rate .

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Higher the discount rate, higher is the FV of
annuity

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C A L C U L AT I O N
(FV) OF AN
ANNUITY
Mathematically,

LV of an Annuity = C* [(1+i)^n -1 ]/i

where,

C = Cash flow per period

i = Interest rate

n = Number of payments

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C A L C U L AT I O N O F
PV & FV OF AN
ANNUITY DUE

Mathematically,
PV of an Annuity Due = C*[{ 1- (1+i)" }/i] * (1+i)

FV of an Annuity Due = C*[{ (1+i)" — 1 }/i] * (1+i)

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S U M M A RY

So , after this presentation we have to know

about that The future value of an annuity is the
total value of payments at a specific point in
time. The present value is how much money
would be required now to produce those
future payments, and the mathematical
formula of PV and FV.

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T H A N K YO U
Afride Laskar

afridelaskar@gmail.com

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