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Product Edition
Version
annuity
Basics
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Type
Function
Syntax
annuity(interestRate,numberOfPeriods)
Introduced
1.0
Environment
Desktop, Web and Server
Platform Support
MacOS,Mac OS X,Windows,Linux
Security
None required
Summary
Computes the value of an annuity given an interest rate and a number of payments.
Examples

annuity(.08,10)
annuity(currentAnnualRate/12,monthsOfLoan)

Additional Comments
Expander triangle

Use the annuity function to calculate the present or future value of an annuity or to calculate loan payments.

Parameters:

The interestRate is a positive number. The interestRate is expressed as a fraction of 1 so, for example, an 8% rate is written .08.

The numberOfPeriods is a positive number.

Value:

The annuity function returns a positive number.

Comments:

The formula for the value of an ordinary annuity is

(1 - (1 + interestRate)^(-numberOfPeriods))/interestRate

The annuity function calculates this value.

The numberOfPeriods and the interestRate must use the same unit of time. For example, if the periods are months, the interest rate is the interest per month.

You can use the annuity function to calculate the amount of loan payments as follows:

paymentAmount = totalAmount/annuity(rate,periods)

For example, if the loan is for $2500 at an interest rate of 2% per month and is to be repaid in a year, the monthly payment is 2500/annuity(.02,12) or $236.40.

User Comments
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