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Annuity calculator

Annuities-certain with the notation the exams use. Set the effective rate, term and payment, and every standard value updates live: in arrears, due, continuous and increasing, present and accumulated, plus the five equivalent ways of quoting the same interest rate.

Present values at time 0

vnDiscount factor over the term
0.613913
anPayments in arrears
7.7217
anPayments in advance (due)
8.1078
anPayable continuously
7.9132
(Ia)nIncreasing 1, 2, …, n (arrears)
39.3738

Accumulated values at time n

(1+i)nAccumulation of 1 invested now
1.628895
snPayments in arrears
12.5779
snPayments in advance (due)
13.2068

Accumulated values are the present values rolled up: s = a × (1+i)ⁿ.

The same rate, quoted every way

iEffective annual rate
5.0000%
dEffective discount rate, i/(1+i)
4.7619%
δForce of interest, ln(1+i)
4.8790%
i(p)Nominal rate convertible 12-thly
4.8889%
d(p)Nominal discount rate, 12-thly
4.8691%

All five describe identical growth: 1 invested for a year becomes 1 + i under any of them. δ compounds continuously; i⁽ᵖ⁾/p is applied p times a year.

The formulas behind the numbers

Everything reduces to the discount factor v = 1/(1+i). An annuity paying 1 at the end of each year for n years is worth the geometric sum of discounted payments:

an = 1 - vnian = 1 - vndsn = (1+i)n - 1i

Moving the payments to the start of each year swaps i for the discount rate d in the denominator; paying continuously swaps it for the force of interest δ. Accumulated values are the same quantities rolled forward n years at (1+i)ⁿ. The increasing annuity (Ia) pays 1, then 2, up to n, and is the workhorse behind premium and benefit escalation questions.

Why five versions of one interest rate?

Because payments arrive at different frequencies. The effective rate i compounds once a year; a mortgage quoted at i⁽¹²⁾ applies a twelfth of the nominal rate each month; bonds discount with d; and anything in continuous time uses δ. They all describe the same growth, and converting between them is the first skill CM1 tests. A handy sense check: for any positive rate, d < d⁽ᵖ⁾ < δ < i⁽ᵖ⁾ < i.

Studying CM1? Memori is a flashcard app built by actuarial students; the shop carries a ready-made CM1 notation and formulas set, and the app renders all of this notation natively. See the notation cheat sheet or join the beta.

Annuities-certain only: these values involve no mortality. For education, not financial advice.