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Annuity Calculator: Value of Your Future Annuity Payments

Here is a simple way to understand the value of your future annuity payments and how an annuity calculator estimates how much an annuity is worth after a number of years.

 

An annuity calculator can determine now much an annuity will be worth in the future, given a compound interest rate and the frequency of payments. If you are interested in calculating the exact value of your future annuity payments, please give us a call at 1-866-744-9935.

 

Future Value of Money

 

Let's start by understanding the concept of future value. If you put an amount of money aside in a cash deposit, earning interest on interest paid (otherwise referred to as compound interest), your cash deposit will grow based in the compounding rate and frequency, as well as the period.

 

Future Value using an Annuity Calculator

 

So let's say that you are currently receiving annuity payments and you are considering selling them for a lump sum of cash. Should you sell your annuity payments now of wait to get paid? By using an annuity calculator to calculate the interest rates and compounding intervals you'll be able to compare your options and determine the value of your future annuity payments to get cash now instead of waiting years to get paid.

 

Suppose that you are receiving $400 every month for the next 10 years and you want to figure out the present value of your future payments. An annuity calculator will estimate the value of your future payment series by factoring the set interest and payment intervals. This would result in 12 x 10 = 120 future payments. You are receiving 400 dollars every month, and assuming that sell your annuity payments at an industry standard rate of 18%. Using an annuity calculator you can now calculate what your annuity is worth to the buyer. It is very important that you do not use the monthly annuity payments with a yearly annuity rate. This will give you an absolutely false calculation!

 

The above annuity calculator example would result in a present value of $22,199.38.

 

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