Equivalent Annuity Cashflow Calculator | Sample Business Plan

Equivalent Annuity

Rate per Period (r) : %

NPV : $

Number of Periods (n) : years

Equivalent Annuity (C) =  $

** Note: This calculator does the math for the percentage in variable r, so there is no need to put it in decimal form (i.e. if it is 8%, enter an 8. Additionally, the calculator converts variable n to negative, so enter it as a positive value.

Equivalent Annuity Formula

C = r(NPV) ÷ 1 - (1 + r)^-n

C = Equivalent Annuity Cash Flow
r = Rate per period
NPV = Net Present Value
n = Number of periods

What is Equivalent Annuity?

This formula is used in capital budgeting; the net present value of an investment is shown as a series of equal cash flows for the length of the investment. Additionally, it should be noted that equivalent annuity is generally used to compare two different projects to determine which will be more attractive to pursue.