Annuity Factor Formula

Annuity Factor Formula

Annuity Factor is used to calculate the present value of annuity. Annuity Factor can be calculated by following formula

Annuity Factor =1-(1+i)^-n

                          i

i=interest rate

n=number of periods

Example

Years= 4 Years

Interest Rate =14%

Calculate Annuity Factor

Solution

Annuity Factor =1-(1+i)^-n

                          i

Annuity Factor =1-(1+14%)^-4

                            i

=2.913