Present Value of an Annuity and Future Value
The present value is the monetary value of all your future annuitant payments. The discount rate of interest is also a part of this equation. An annuitant’s future payments are usually lessened as well depending on the rate of interest. So, the larger the rate of interest, the lesser of the present value of the annuitant’s future payments is. In a way, the interest rate determines the present worth of the loan.
There are many financial instruments that can help you determine the present worth of a loan. One such instrument is an annuities calculator. You need not be a financial expert to understand these calculators. They are easy to understand. However, it is important to know that the present worth of a loan does not always correlate to the future value.
The present cost of annuities is determined by several factors. These factors include the rate of interest, risk factor, and the term. The present cost of a loan depends largely on the type of loan. A fixed annuity, for example, has the same rate of interest for the whole duration of the loan period. This means that the total present cost of a fixed annuity depends on the amount of money borrowed as well as the period over which the loan is taken. In addition, it depends on the length of time the loan is taken and the duration of repayment of loan.
In the case of variable annuities, however, there is no fixed rate of interest. Instead, the present cost of a variable annuities depends mainly on the duration of repayment. It also depends on the interest rates charged on the loans taken. This is why, for a loan to have a fixed cost, it must have an interest rate fixed at a certain level.
As an alternative to calculating the present cost of the annuitants, one can calculate its future value by calculating the cash flows into and out of it. In other words, you can calculate the future cash flows of an annuitant by applying a cash flow simulator to the loan amount. An annuitant cash flows simulator uses inputs to compute mathematical equations to give an approximate value for the future cash flows of an annuitant. The future value is the difference between present and future cash flows of an annuitant and is a useful tool for determining the future worth of an annuitant. The value varies as the cash flows in the annuitant come and go. This is what the cash flow simulator looks up.
There are many cash flow simulators available on the Internet. Some of these are free, while others cost money. You can also download the free cash flow simulators from the Internet. However, if you want to make a detailed comparison of various cash flow simulators, it is best to hire a professional who will use the information he has gathered on your behalf. Another alternative to an annuitant calculator is to hire an online calculator for the future value. These are available online but they do not have the ability to work with an annuitant annuities.