An annuity is a sequence of payments with a fixed frequency. Why does the present value of an annuity decrease as the interest rate increases? Does the future value also decrease as the interest rate increases? I know this is easy to see regarding the formula for the present value of an annuity but I feel that my basic theoretical knowledge is lacking and some clarification would help me a lot.
2026-03-25 08:07:02.1774426022
Can someone explain this basic Financial Maths concept to me?
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What amount would you have to put on deposit today to receive $100$ dollars in one year's time ? The higher the interest rate, the lower the amount that you have to put on deposit today. So for a fixed future value ($100$ dollars) the present value (the amount you put on deposit) decreases as the interest rate increase.