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April 20, 2014

April 20, 2014

Posted by **Abbey** on Monday, December 18, 2006 at 12:12pm.

I am using a present value of annuity eguation but don't know how to solve for time.

Can you use logs?

Remember that log a^n= n*log a and you can solve for n in that.

thats what i forgot.

thanks for the help

The value of an annuity usually depends upon the expected remaining years of life of the beneficiary. If the annuity pays out a fixed monthly amount for a specified period, then the formula to use would be the same as amortization. You need an amortization calculator.

The formula is:

A = P*i*(1+i)^n/[(1+i)^n - 1)]

Where:

A = periodic payment amount

P = amount of principal

i = periodic interest rate

n = total number of monthly payments

In your case you want to solve for n, so an interative technique or spreadsheet approach may be required.

Using a mortgage calculatorm at this website,

http://mortgages.interest.com/content/calculators/monthly-payment.asp

I get a payoff period of 12.5 years if the monthly payment is 1101.66 and the interest rate is 9%. It will be a month longer if you pay $1100.

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