The Motley Fool Discussion Boards Previous Page Investing/Strategies / Retirement Investing URL:  http://boards.fool.com/annuity-calculating-npv-19671349.aspx Subject:  Annuity-calculating NPV Date:  10/5/2003  6:33 PM Author:  jesserivera67 Number:  37396 of 81340 Now that all of you have me obsessed with making sure I have this right and comparing apples to apples...let's begin with the constants:Assets: \$199,000Estimated Annual Growth: 6%Term: 7 years (until they start withdrawing)Fees: 2.34% (the actual fees of the annuity)American Express results:Total Fees: \$38,421.95Foregone Earnings: \$7,281.09Total Fees and Foregone earnings: \$45,703.04Total Assets after 7 years subtracting fees: \$253,519.39Vanguard results (.3% fees)Total Fees: \$4,837.59Foregone Earnings: \$889.12Total Fees and Foregone earnings: \$5,726.70Forgone earnings on \$16,000 surrender charge: \$24,058Total Assets after 7 years subtracting fees: \$269,437.63Now the following is the calculation for standard Present Value: FV PV = ------------- n (1 + r)Now if I understand the NPV correctly it would equate to the PV-I where I respresents the Initial Investment...NPV for the Vanguard is \$183,000...got it.NPV for Amex more complex as it is in the annuity. Here's where I'm struggling...If I understand correctly using numbers from above, the FV of the Amex example is \$253,519, So using the above equation...PV = \$168,604Meaning in order to get \$253,519 in 7 years at 6% interest, I should be starting off with no more that \$168,604...but...NPV = PV - INPV = \$168,604 - \$199,000NPV = -\$30,395Since NPV is a negative number, meaning with this investment I'm starting with \$199,000 or \$30k more than I should I should pull out...have I got this right now? Whew... Copyright 1996-2016 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us