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Let's assume that we wish to have Nick and Pete put in place their accounts Using the similar desire charge (r) and compounding (n), Which once the exact same period of time (t), we want the accounts to possess the exact same price (A). Notice that the two variables not outlined In this particular scenario so far are the quantity Nick will place into his bank account initially (P), his current value, and the scale in more information the periodic payment of Pete's annuity (m).

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All we should do now could be remedy the equation for P, and with just a little algebraic manipulation, we should have the system for your existing worth of an annuity:

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