ANNUITY

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

AFRIDE LASKAR

17700121015
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
WHAT IS
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.

ANNUITY
3
PRESENT VALUE
(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.

ANNUITY
Higher the discount rate, the lower the present
value of annuity

4
CALCULATION
(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

ANNUITY
5
FUTURE VALUE
(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 .

ANNUITY
Higher the discount rate, higher is the FV of
annuity

6
CALCULATION
(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

ANNUITY
7
CALCULATION OF
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)

ANNUITY
8
SUMMARY

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.

ANNUITY
9
THANK YOU
Afride Laskar

afridelaskar@gmail.com

ANNUITY
10