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Topic: PV of $1 VS. Annuity Table (

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nicelasvegas2
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Posted: 29 Aug 2009 at 17:31 \| IP Logged

Can someone please tell me when I should use these table...

Thanks!
Andrea

kj_nyc
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Posted: 29 Aug 2009 at 18:01 \| IP Logged

use PV of $1 when you want to know the PV of one amount to be received at one point in the future.

use PV of annuity if you want to know the PV of a stream of fixed amounts that will be received annually (i.e., an annuity) for a number of years.

nicelasvegas2
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Posted: 29 Aug 2009 at 18:53 \| IP Logged

So if the annual pymts are the same... for example, $65,000, 65,000 etc then I would use PV of Annuity? If the pymts are different... for example $65,000, 45,000 etc then I use PV of $1?

Thanks!

kj_nyc
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Posted: 29 Aug 2009 at 18:58 \| IP Logged

yes, if annual payments are the same, use PV of annuity for the number of years the payments will be made (just 1 PV factor multiplied by the payment amount). If annual payments are different, then you have to use PV of $1 for each year that payments are being made (different PV factor for each payment).

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