What is Present Value of Deferred Annuity?
The present value of a deferred annuity refers to the current value of a series of future payments from an annuity, discounted back to the present time. An annuity is a financial product that provides a series of payments at regular intervals, typically monthly, quarterly, or annually, for a specified period or for the duration of one's life.
When the payments from the annuity start at a future date rather than immediately, it's referred to as a deferred annuity. The present value of such an annuity accounts for the time value of money, which means that a dollar received in the future is worth less than a dollar received today due to factors like inflation and the potential to invest money elsewhere.
How to Calculate Present Value of Deferred Annuity?
Present Value of Deferred Annuity calculator uses Present Value of Deferred Annuity = Ordinary Annuity Payment*(1-(1+(Interest Rate*0.01))^-Number of Periods)/((1+(Interest Rate*0.01)^Deferred Periods*(Interest Rate*0.01))) to calculate the Present Value of Deferred Annuity, The Present Value of Deferred Annuity formula refers to the current value of a series of future payments from an annuity, discounted back to the present time. Present Value of Deferred Annuity is denoted by PVDA symbol.
How to calculate Present Value of Deferred Annuity using this online calculator? To use this online calculator for Present Value of Deferred Annuity, enter Ordinary Annuity Payment (PO), Interest Rate (IR), Number of Periods (nPeriods) & Deferred Periods (td) and hit the calculate button. Here is how the Present Value of Deferred Annuity calculation can be explained with given input values -> 253.869 = 2500*(1-(1+(5.5*0.01))^-2)/((1+(5.5*0.01)^9*(5.5*0.01))).