## Time Value of Money

Self-Paced Overview

### Annuities Due

Annuities due*Annuity 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,

FV_{a} = Annuity(FVIF_{a})(1+I)

FV_{a} = 4,000(3.1836)(1.06)

FV_{a} = $13,498.46