Name: annuity

Type: function

Syntax: annuity(<interestRate>, <numberOfPeriods>)

Summary: Computes the <value> of an annuity given an interest rate and a number of payments.

Introduced: 1.0

OS: mac,windows,linux,ios,android

Platforms: desktop,server,web,mobile

Example:

annuity(.08,10)

Example:

annuity(currentAnnualRate/12,monthsOfLoan)

Parameters:

interestRate: A positive number. The interestRate is expressed as a fraction of 1 so, for example, an 8% rate is written .08.

numberOfPeriods: A positive number.

Returns: The <annuity> <function> <return|returns> a positive number.

Description:

Use the <annuity> <function> to calculate the present or future value of an annuity or to calculate loan payments.

The formula for the value of an ordinary annuity is

(1 - (1 + <interestRate>)^(- <numberOfPeriods>))/ <interestRate>

The <annuity> <function> calculates this <value>.

The <numberOfPeriods> and the <interestRate> must use the same unit of time. For example, if the periods are months, the interest rate is the interest per month.

You can use the <annuity> <function> to calculate the amount of loan payments as follows:

paymentAmount = totalAmount/annuity(rate,periods)

For example, if the loan is for $2500 at an interest rate of 2% per month and is to be repaid in a year, the monthly payment is 2500/annuity(.02,12) or $236.40.

References: return (glossary), compound (function), value (function), function (control_st)

Tags: math