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Future value (FV) of an annuity due calculator

LAST UPDATE: September 29th, 2018

Future Value of an Annuity Due Calculator

What is a Future Value (FV) of an annuity due?

Future value (FV) of an annuity due is a financial calculation used when determining a value of a date in the future of a set of annuity payments that occur each compounding period. When the payments occur at the beginning of the compounding period (as opposed to a regular annuity, where the payments occur at the end of the compounding period).

How is the Future Value of an Annuity Due calculated?

The FV of an annuity due is calculated through a financial formula used with the time value of money.
\text{Future Value} = \text{Annuity Payment} \times \frac{(1 + \text{Interest Rate})^\text{Number of Periods} - 1}{\text{Interest Rate}} \times (1 + \text{Interest Rate})

Example

We will receive $100 at the beginning of each year for the next 10 years. The interest rate at the moment is 2.2% compounded annually. What is the future value of this annuity due after the 12th compounding period?
\text{Future Value} = 100 \times \frac{(1 + 0.022)^10 - 1}{0.022} \times (1 + 0.022)
\text{Future Value} = 100 \times \frac{(1.022)^10 - 1}{0.022} \times 1.022
\text{Future Value} = 100 \times \frac{1.243108 - 1}{0.022} \times 1.022
\text{Future Value} = 100 \times \frac{0.243108}{0.022} \times 1.022
\text{Future Value} = 100 \times 11.05036 \times 1.022
\text{Future Value} = 1,129.35

What are periods?

Periods are the number of times that compounding (and payments) take place.

What is the rate?

The rate is the amount of interest earned per compounding period.

What is Payment (PMT)?

A payment is an amount either deposited or withdrawn at each compounding period. A negative number designates an amount that is deposited, while a positive one withdrawn. For example, if $100 is deposited each compounding period, it would be entered as '-100', while if $75 was payed out each compounding period, it would be entered as '75'.

Sources and External Resources

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