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Annuity Formula:
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An annuity calculator helps determine regular payments from an investment or loan based on present value, interest rate, and number of payment periods. It's commonly used in financial planning for retirement income, loan repayments, and investment analysis.
The calculator uses the annuity formula:
Where:
Explanation: This formula calculates the fixed payment amount needed to pay off a loan or receive from an investment over a specified period at a given interest rate.
Details: Accurate annuity calculations are crucial for financial planning, retirement income projections, loan amortization schedules, and investment decision-making. They help individuals and businesses plan for future cash flows.
Tips: Enter present value in AUD, interest rate as a decimal (e.g., 0.05 for 5%), and number of payment periods in months. All values must be positive numbers.
Q1: What's the difference between ordinary annuity and annuity due?
A: Ordinary annuity payments are made at the end of each period, while annuity due payments are made at the beginning. This calculator assumes ordinary annuity payments.
Q2: Can I use this for monthly loan payments?
A: Yes, this calculator works for calculating monthly loan payments when you know the loan amount, interest rate, and loan term.
Q3: How do I convert annual interest to monthly?
A: Divide the annual interest rate by 12. For example, 6% annual rate becomes 0.06/12 = 0.005 monthly rate.
Q4: What if I have additional fees or charges?
A: This calculator provides the base payment amount. Additional fees would need to be added separately to get the total payment amount.
Q5: Can this be used for investment planning?
A: Yes, it can calculate regular withdrawal amounts from an investment portfolio while accounting for interest earnings.