## Present Value Annuity Factor

The present value annuity factor is used to calculate the present value of future one dollar cash flows.

This formula relies on the concept of time value of money. Time value of money is the concept that a amount received at a future date is worth less than if the same amount is received today. An amount received today can be invested towards future earnings or receive sooner utility. For this particular formula, the present value of one amount periodic cash flows is to be used for simplifying the calculation of payments larger than one amount.

## $$\frac{1-[1+r{]}^{-n}}{r}$$

Here,r=rate per period,n=number of periods.

ENTER THE VARIABLES TO BE USED IN THE FORMULA