Retirement & Investment
Structured Settlement Annuity Calculator
Present value of a future structured settlement or annuity payment stream at a given discount rate.
Formula
Present value of an annuity
PV = PMT × [1 − (1+r)&supminus;ⁿ] ÷ r
PMTThe periodic payment amount
rThe periodic discount rate (annual rate ÷ payments per year)
nThe total number of remaining payments
Example
Worked example
$1,500/month for 120 remaining months, discounted at 8% annually (0.667% monthly): present value works out to roughly $130,000 — well below the $180,000 undiscounted total, since the discount rate compounds over a 10-year payment stream.
FAQ
Common questions
Discounting reflects that a dollar received years from now is worth less than a dollar today — and factoring companies apply a discount rate that also covers their own profit margin and risk. Rates in this market commonly run well into double digits, which is why lump-sum offers are often a fraction of the payments’ face value.
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