Understanding PVA with constant and uneven cash flows

This page provides definition, example, calculation, and a calculator for PVA or Present Value of Annuities with constant and uneven cash flows. Don't waste time with MS Excel templates - we are sure, here you will find all you need!

How do you define PVA?

The present value of annuity is found as the sum of Present Values of individual cash flows of the stream

Annuities with uneven cash flows

Usually we have annuities with constant stream of equal payment yet in good number of circumstances we are required to pay or deposit uneven amount of payments

Formula for PVA with uneven cash flows?

Example of PVA with uneven cash flows

Let us examine finding Present Value of annuity or PVA with an example investment proposal. Let us say we were offered a series of cash inflows at the end of each of the next four years as $5000, $4000, $3000, and $1000. And the discount rate is 12%.

PVA Calculation @ 12%

Year	NET CASH FLOW	PVIF @ 12%	PRESENT VALUE
PVA at 12%
1	5000	0.893	$4,465
2	4000	0.797	$3,188
3	3000	0.712	$2,136
4	1000	0.636	$636
		PVA	$10,425

Annuities with constant cash flows

Most annuities require a series of periodic payment in same amount over a period of time. This is the most common type of annuity with constant cash flows.

Formula for PVA with constant cash flows?

Example of PVA with constant cash flows

Let us examine finding Present Value of annuity or PVA with an example investment proposal. Let us say we were offered a series of cash inflows at the end of each of the next four years in the amount of $1000. And the discount rate or return is 10%.

PVA Calculation @ 10%

	Payment	PVIFA @ 10%	PVA
PVA at 10% for 4 years
	1000	3.170	$3,170