Equivalent Annual Annuity Calculator

✖The Rate per Period is the interest rate charged.ⓘ Rate per Period [r]			+10% -10%
✖Net Present Value (NPV) is a method of determining the current value of all future cash flows generated by a project after accounting for the initial capital investment.ⓘ Net Present Value (NPV) [NPV]			+10% -10%
✖The Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.ⓘ Number of Periods [n]			+10% -10%

✖Equivalent Annuity Cashflow refers to a series of equal cash flows that have the same present value as a given investment or series of cash flows.ⓘ Equivalent Annual Annuity [C_f]

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Formula

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Equivalent Annual Annuity

Formula

`"C"_{"f"} = ("r"*("NPV"))/(1-(1+"r")^-"n")`

Example

`"630"=("0.50"*("700"))/(1-(1+"0.50")^-"2")`

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Equivalent Annual Annuity Solution

STEP 0: Pre-Calculation Summary

Formula Used

Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods)
C_f = (r*(NPV))/(1-(1+r)^-n)
This formula uses 4 Variables

Variables Used

Equivalent Annuity Cashflow - Equivalent Annuity Cashflow refers to a series of equal cash flows that have the same present value as a given investment or series of cash flows.
Rate per Period - The Rate per Period is the interest rate charged.
Net Present Value (NPV) - Net Present Value (NPV) is a method of determining the current value of all future cash flows generated by a project after accounting for the initial capital investment.
Number of Periods - The Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.

STEP 1: Convert Input(s) to Base Unit

Rate per Period: 0.5 --> No Conversion Required
Net Present Value (NPV): 700 --> No Conversion Required
Number of Periods: 2 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

C_f = (r*(NPV))/(1-(1+r)^-n) --> (0.5*(700))/(1-(1+0.5)^-2)

Evaluating ... ...

C_f = 630

STEP 3: Convert Result to Output's Unit

630 --> No Conversion Required

FINAL ANSWER

630 <-- Equivalent Annuity Cashflow

(Calculation completed in 00.004 seconds)

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< 22 Investment Calculators

Portfolio Standard Deviation

Go Portfolio Standard Deviation = sqrt((Asset Weight)^2*Variance of Returns on Assets 1^2+(Asset Weight)^2*Variance of Returns on Assets 2^2+2*(Asset Weight*Asset Weight*Variance of Returns on Assets 1*Variance of Returns on Assets 2*Portfolio Correlation Coefficient))

Portfolio Variance

Go Portfolio Variance = (Asset Weight)^2*Variance of Returns on Assets 1^2+(Asset Weight)^2*Variance of Returns on Assets 2^2+2*(Asset Weight*Asset Weight*Variance of Returns on Assets 1*Variance of Returns on Assets 2*Portfolio Correlation Coefficient)

Jensen's Alpha

Go Jensen's Alpha = Annual Return on Investment-(Risk Free Interest Rate+Beta of the Portfolio*(Annual return of the market benchmark-Risk Free Interest Rate))

Compound Interest

Go Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested)

Certificate of Deposit

Go Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years)

Actuarial Method Unearned Interest Loan

Go Actuarial Method Unearned Interest Loan = (Number of Remaining Monthly Payments*Monthly Payment*Annual Percentage Rate)/(100+Annual Percentage Rate)

Equivalent Annual Annuity

Go Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods)

Portfolio Expected Return

Go Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2)

Total Stock Return

Go Total Stock Return = ((Ending Stock Price-Initial Stock Price)+Dividend)/Initial Stock Price

Annuity Payment

Go Annuity Payment = (Rate per Period*Present Value)/(1-(1+Rate per Period)^-Number of Periods)

Value at Risk

Go Value at Risk = -Mean of Profit and Loss+Standard Deviation of Profit and Loss*Standard Normal Variate

Profitability Index

Go Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment

Sharpe Ratio

Go Sharpe Ratio = (Expected Portfolio Return-Risk Free Rate)/Portfolio Standard Deviation

Capital Gains Yield

Go Capital Gains Yield = (Current Stock Price-Initial Stock Price)/Initial Stock Price

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Go Treynor's Ratio = (Expected Portfolio Return-Risk Free Rate)/Beta of the Portfolio

Average Return on Investment

Go Average Return = modulus(Total Value of Return)/Total Number of Returns

Information Ratio

Go Information Ratio = (Portfolio Return-Benchmark Return)/Tracking Error

Rate of Return

Go Rate of Return = ((Current Value-Original Value)/Original Value)*100

Straight Line Depreciation

Go Straight Line Depreciation = (Asset's Cost-Salvage)/Life

Portfolio Turnover Rate

Go Porfolio Turnover Rate = (Total Sales and Purchases of Shares/Average Net Assets)*100

Real Rate of Return

Go Real Rate of Return = ((1+Nominal Rate)/(1+Inflation Rate))-1

Risk Premium

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Equivalent Annual Annuity Formula

Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods)
C_f = (r*(NPV))/(1-(1+r)^-n)

What is Equivalent Annual Annuity?

Equivalent annual annuity (EAA) is a financial metric used to evaluate and compare investment projects or opportunities with different cash flow profiles. It represents the constant annual cash flow that would be equivalent to the present value of the cash flows associated with the investment. In other words, it calculates the annual cash flow that, if received every year, would result in the same present value as the original cash flows.
EAA is particularly useful when comparing projects with different durations or cash flow patterns. By converting the cash flows of each project into equivalent annual annuities, decision-makers can more easily compare the projects on an apples-to-apples basis.

How to Calculate Equivalent Annual Annuity?

Equivalent Annual Annuity calculator uses Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods) to calculate the Equivalent Annuity Cashflow, The Equivalent Annual Annuity formula is defined as a financial metric used to evaluate and compare investment projects or opportunities with different cash flow profiles. Equivalent Annuity Cashflow is denoted by C_f symbol.

How to calculate Equivalent Annual Annuity using this online calculator? To use this online calculator for Equivalent Annual Annuity, enter Rate per Period (r), Net Present Value (NPV) (NPV) & Number of Periods (n) and hit the calculate button. Here is how the Equivalent Annual Annuity calculation can be explained with given input values -> 630 = (0.5*(700))/(1-(1+0.5)^-2).

FAQ

What is Equivalent Annual Annuity?

The Equivalent Annual Annuity formula is defined as a financial metric used to evaluate and compare investment projects or opportunities with different cash flow profiles and is represented as C_f = (r*(NPV))/(1-(1+r)^-n) or Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods). The Rate per Period is the interest rate charged, Net Present Value (NPV) is a method of determining the current value of all future cash flows generated by a project after accounting for the initial capital investment & The Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.

How to calculate Equivalent Annual Annuity?

The Equivalent Annual Annuity formula is defined as a financial metric used to evaluate and compare investment projects or opportunities with different cash flow profiles is calculated using Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods). To calculate Equivalent Annual Annuity, you need Rate per Period (r), Net Present Value (NPV) (NPV) & Number of Periods (n). With our tool, you need to enter the respective value for Rate per Period, Net Present Value (NPV) & Number of Periods and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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