ToolBox CS
Warning
Product support for ToolBox CS ended on October 31, 2022.
Help & How-To Center content for ToolBox CS may be outdated and is used at your own risk.
This calculator computes the present value of a series of fixed payments occurring at the end of each period. The basic principle is that the same amount of money is more valuable today than it will be in the future because today's dollars can be invested to make more money.
Example
An individual won the lottery. Should he take the one-time cash option of $12 million or receive 20 yearly payments of $1 million each?
| Field | Input |
|---|---|
| Annuity payment | $1,000,000 |
| Payments per year | 1 |
| Years of annuity | 20 |
| Annual discount rate | 5.00% |
In this example, the present value of this annuity is $12,462,210.34.
Notes
- The 5.00% annual discount rate reflects the rate of return expected on investments.
- The discount rate is either a rate of return that could be earned on today's dollars or an inflation rate to compare the purchasing power of today's dollars with future dollars.
Was this article helpful?
Thank you for the feedback!
|
Get the most out of your Thomson Reuters Tax & Accounting products. Our continued learning packages will teach you how to better use the tools you already own, while earning CPE credit. Learn more. |
|
|
|
Chat - Best option for simple questions Call us at +1 800 968 0600. You might like to see our hours and menu options before calling |