The annuity payment formula shown is for ordinary annuities. This formula assumes that the rate does not change, the payments stay the same, and that the first payment is one period away. An annuity that grows at a proportionate rate would use the growing annuity payment formula. A fixed annuity provides plan owners protection from interest rate fluctuations in the market. However, the fixed annuity does not account for inflation, which can reduce the value of payments An annuity is a series of equal cash flows, spaced equally in time. In this example, an annuity pays 10,000 per year for the next 25 years, with an interest rate (discount rate) of 7%. To calculate present value, the PV function is configured as follows: rate - the value from cell C7, 7%.