Present Value Annuity (Ordinary) explained in 3 minutes.

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Present Value of Ordinary Annuity Formula Explained: Master Annuity Valuation
Learn how to calculate the present value of an ordinary annuity with this complete step-by-step tutorial! This essential finance formula helps you determine what a series of future payments is worth today.
What You'll Learn:

What is an ordinary annuity and how it differs from other annuities
The Present Value of Ordinary Annuity formula breakdown
When payments occur (end of period vs. beginning)
Real-world examples: loans, mortgages, retirement income
Step-by-step calculation walkthroughs
How to solve problems manually and with financial calculators
Excel PV function tutorial

The PV Ordinary Annuity Formula:
PV = PMT × [(1 - (1 + r)^-n) / r]
Where:

PV = Present Value
PMT = Payment amount per period
r = Interest rate per period
n = Number of periods

Why This Formula Matters:
Understanding the present value of ordinary annuities is crucial for evaluating loan payments, mortgage calculations, pension valuations, lease agreements, and investment decisions. It answers the question: "What is a series of future payments worth to me today?"
Perfect For:
✓ Finance and accounting students
✓ Real estate investors analyzing rental income
✓ Anyone evaluating loan or mortgage offers
✓ Retirement planning and pension calculations
✓ CFA, CFP, and FRM exam preparation
✓ Business valuation and investment analysis

Time value of money principles
Discount rates and their impact
Payment timing (end of period)
How to adjust for different compounding periods
Real-world financial applications

Real-World Applications:

Mortgage and loan evaluations
Lease vs. buy decisions
Pension and retirement income planning
Bond valuation
Insurance settlements
Structured payment analysis

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