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Annuity Payments Calculator

Given a balance, a return and a number of years, the payment that exactly exhausts the account is one algebraic step away. The hard part is not the formula — it is recognising that a level payment for a fixed period is a very specific promise that real markets do not make.

Payment each period

$2,922.95

Annual income equivalent
$35,075.40
Total received over the horizon
$876,885.06
Supplied by investment growth
$376,885.06

Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.

The formula this calculator uses

PMT = PV x r x (1 + r)^n / ((1 + r)^n - 1)

PMT
Payment received each period
PV
Present value — the balance at the start
r
Periodic rate — annual return divided by payments per year
n
Total number of payments

How to check the result by hand

  1. 1

    Convert the annual return to a periodic rate

    Divide by payments per year. A 5% annual return with monthly payments is r = 0.05/12 = 0.00416667. Using 0.05 as a monthly rate inflates every answer beyond plausibility.

  2. 2

    Count the total number of payments

    Years times payments per year. Twenty-five years monthly is 300 payments. This is where most spreadsheets go wrong, because the units have to match those used for the rate.

  3. 3

    Compute the growth factor

    (1 + r)^n over the full horizon. For the default case that is (1.00416667)^300 = 3.4812905, meaning each dollar left untouched for the whole period would grow past three and a half dollars.

  4. 4

    Apply the payment formula

    $500,000 x 0.00416667 x 3.4812905 / (3.4812905 - 1) = $2,922.95 per month. Notice this exceeds the $2,083.33 of pure interest income — that surplus is your own capital coming back.

  5. 5

    Sanity-check against the totals

    300 payments of $2,922.95 is $876,885.06 withdrawn against a $500,000 starting balance, so $376,885.06 — 43% of everything received — must come from growth. If that share seems implausible for your return assumption, recompute.

For worked examples, common mistakes and the limits of this formula, read the full How To Calculate Annuity Payments page.