Annuity Table

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DEFINITION of 'Annuity Table'

A method for determining the present value of a structured series of payments. The annuity table provides a factor, based on time and a discount rate, by which an annuity payment can be multiplied to determine its present value. For example, an annuity table could be used to calculate the present value of an annuity that paid $10,000 a year for 15 years if the interest rate is expected to be 3\%. Financial calculators and computer software can also be used for this purpose.

BREAKING DOWN 'Annuity Table'

A lottery winner could use an annuity table to determine whether it made more financial sense to take his lottery winnings as a lump-sum payment today or as a series of payments over many years. Lottery winnings are a rare form of annuity; more commonly, annuities are a type of investment used to provide individuals with a steady income in retirement.



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RELATED FAQS
  1. For what types of financial instruments would I want to calculate the present value ...

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  2. What is the difference between the present value of an annuity and the future value ...

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  3. What are the risks of annuities in a recession?

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  4. What are the main kinds of annuities?

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  5. Why would I need to calculate the present value of an annuity?

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  6. How do I calculate the future value of an annuity?

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