An annuity is a series of equal payments made at regular intervals over a specified period. Annuities are commonly used in loans, mortgages, retirement plans, and insurance products. There are two main types: an ordinary annuity (payments at the end of each period) and an annuity due (payments at the beginning of each period). This calculator uses ordinary annuity formulas.

The present value of an annuity tells you how much a stream of future payments is worth today: PV = PMT × [(1 - (1 + r)^(-n)) / r]. The future value tells you how much a series of payments will grow to: FV = PMT × [((1 + r)^n - 1) / r]. The payment formula, derived from the present value equation, calculates the periodic amount needed to repay a loan or reach a savings goal: PMT = PV × [r(1 + r)^n / ((1 + r)^n - 1)].

For example, if you borrow $10,000 at 6% per period for 20 periods, you would need to pay approximately $872 per period. Over the life of the annuity, you would pay a total of about $17,436, meaning roughly $7,436 goes toward interest. Understanding annuity calculations is essential for evaluating loan offers, planning retirement income streams, and comparing different savings strategies.