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Present Value Annuity Factor Calculator

Calculate the present value annuity factor from an interest rate and number of years. See how much principal you need today to receive a fixed amount every year, plus the capital recovery factor (its reciprocal).

Input

%
yrs
$

Enter this to also calculate the principal you need

Result

Present value annuity factor (rate 1% · 20 yrs)

18.0456

Annuity factor

18.0456

Capital recovery factor (reciprocal)

0.0554

How it works

  • The present value annuity factor is the multiplier that gives the principal (present value) needed today to receive (or repay) a fixed amount each year. It is calculated as annuity factor = (1 - (1 + r)^-n) / r, where r is the interest rate and n is the number of years (when the rate is 0%, it equals n).
  • Enter your annual payout and the tool computes "principal needed = annual payout x annuity factor." For example, if the annuity factor is 9.0 and you want to receive $10,000 a year, you need about $90,000 in principal.
  • The higher the interest rate and the shorter the term, the smaller the annuity factor becomes, so less principal is required for the same payout.
  • The annuity factor is the reciprocal of the capital recovery factor (capital recovery factor = 1 / annuity factor). To find out how much you can withdraw each year from a given principal, use the capital recovery factor instead.
  • This tool assumes one payment per year made at the end of each period (ordinary annuity). It does not support payments at the start of the period (annuity due) or multiple payments per year.
  • Note: results are simplified estimates. Actual pensions and investment products may differ due to fees, taxes, and changes in returns.