Definition:Compound Interest Table/Annuity Present Value

Definition

Let a principal $P$ be invested every conversion period, and accumulated under compound interest with an interest rate $r$ over a number of conversion periods $n$.

The present value of $P$ is defined as:

$\dfrac {1 - \paren {1 + r}^{-n} } r$

That is, it is the amount necessary to provide $1$ unit payment at the end of $n$ conversion periods.

Also see

• Results about annuity present values can be found here.

Sources

• 1998: David Nelson: The Penguin Dictionary of Mathematics (2nd ed.) ... (previous) ... (next): interest
• 2008: David Nelson: The Penguin Dictionary of Mathematics (4th ed.) ... (previous) ... (next): interest