What is an annuity?
An annuity is a series of payments made at equal intervals.
In the real world, for example, it can be understood as regular deposits to a savings account.
As you can find on Wikipedia here is the ordinary annuity formula:
- PV: The present value of an ordinary annuity
- PMT: Value of each payment
- r: interest rate per period
- n: number of periods
And in Python?
If we literally transpose this formula in Python.
If we take an example with
- PMT = 100$ : Value at each payment
- r = 7% or 0.07 : interest rate per period here 7% per annum.
- n = 5 : 5 years
Here you are! You now know how to compute the present value of an annuity.
More on financial analysis
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