Annual Worth Calculator

About this calculator

In engineering economics, annual worth (AW) converts a lump-sum present value into an equivalent uniform series of payments spread over n years — the same amount of money each year that, discounted back at the given interest rate, equals the original present value. The conversion uses the capital recovery factor, A/P = i(1+i)^n / [(1+i)^n − 1], the standard formula for turning a present sum into a level annuity.

Annual worth analysis is especially useful for comparing investments or equipment with different service lives, since converting each alternative to an “equivalent cost or benefit per year” puts them on the same footing without needing a common analysis period the way net present value comparisons sometimes require. It is a staple technique in capital budgeting, project selection and cost-benefit analysis taught alongside present worth and internal rate of return.