Q:

How do you use an annuity rate table?

A:

Quick Answer

The present value of an annuity, or PVOA, is found by selecting the relevant payment period from the first column of a PVOA table and indexing that value with the applicable interest rate, according AccountingTools. That factor multiplied by the final value of the annuity yields the PVOA.

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Full Answer

An annuity table is not as precise as financial software when it comes to determining PVOA, but it is still an effective tool, explains AccountingCoach. In addition to finding PVOA, it can also be used to predict an annuity's value at some point in the future or to estimate the value it had at some point in the past. The real value of an annuity table lies in revealing how much it costs to allow payments over time rather taking payment all at once and up front.

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