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 ...

    Learn about the types of financial instruments the present value of an annuity calculation is most useful for, including ... Read Answer >>
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    Find out about the difference between the future value and present value of a fixed annuity, including how to use these calculations ... Read Answer >>
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  5. Why would I need to calculate the present value of an annuity?

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