How to Calculate the Present Value of an Annuity


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What does the P stand for in this formula?

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1. The present value of an annuity is the worth of an annuity _____.

2. Calculate the present value of annuity with fixed payments of $500, annual interest rate of 4%, and a total of 3 annual payments.

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About This Quiz & Worksheet

The quiz will test you on the formulas and definitions related to present value. Some other questions will ask you to calculate the present value of an annuity.

Quiz & Worksheet Goals

The quiz will test you on the following:

  • Present value
  • Annuity
  • Present value formula
  • Interest rates

Skills Practiced

You will practice these following skills:

  • Reading comprehension - ensure that you draw the most important information from the related present value of an annuity lesson
  • Problem solving - use acquired knowledge to solve present value practice problems
  • Interpreting information - verify that you can read information regarding interest rates
  • Information recall - access the knowledge you've gained concerning the present value of an annuity

Additional Learning

Finish the quiz and head over to the corresponding lesson How to Calculate the Present Value of an Annuity. The lesson covers the following topics:

  • Exploring the definition of annuity
  • Relating annuity to present value
  • Explaining fixed payment amounts
  • Calculating present values of annuities