StudyFinance

StudyFinance

Time Value of Money

 Self-Paced Overview

Annuities Due

Annuities dueAnnuity Due:Beginning-of-year cash flows. are beginning-of-year annuities. To work annuities due, simply set up the problem the same way as would be done with an ordinary annuity, then multiply the resulting factor by (1+I). This is done whether the problem is present value or future value.

To illustrate:

Find the future value of a three-year 6% annuity due or $4,000.

so,

FVa = Annuity(FVIFa)(1+I)

FVa = 4,000(3.1836)(1.06)

FVa = $13,498.46


StudyFinance.com is maintained by Dr. Sharon Garrison
Terms of Use • Privacy • Copyright © 1999–2018 StudyFinance.com