Annuity Due Calculator
Calculate present value, future value, and periodic payments for annuity due. Compare with ordinary annuity to see the benefit of beginning-of-period payments.
About Annuity Due Calculator
An annuity due is a series of equal payments made at the beginning of each period. This differs from an ordinary annuity, where payments are made at the end of each period. Common examples of annuity due include rent payments, lease payments, and insurance premiums.
Future Value of Annuity Due Formula:
FV = PMT x [(1+r)^n - 1] / r x (1+r)
FV = Future Value | PMT = Payment | r = Rate per period | n = Number of periods
Present Value of Annuity Due Formula:
PV = PMT x [1 - (1+r)^-n] / r x (1+r)
PV = Present Value | PMT = Payment | r = Rate per period | n = Number of periods
Annuity Due vs Ordinary Annuity
Annuity Due
Payments at the beginning of each period. Higher future value because payments have more time to earn interest. Examples: Rent, lease payments, insurance premiums.
Ordinary Annuity
Payments at the end of each period. Lower future value compared to annuity due. Examples: Mortgage payments, bond coupon payments, loan payments.
When to Use Annuity Due
- Rent Calculations: Rent is typically paid at the beginning of each month
- Lease Payments: Car leases and equipment leases often require advance payments
- Insurance Premiums: Insurance is usually paid before coverage begins
- Retirement Planning: When planning to invest at the start of each period
- Savings Plans: Regular deposits made at the beginning of each period
The Annuity Due Advantage
Because annuity due payments are made at the beginning of each period, each payment has one additional period to earn interest compared to an ordinary annuity. This results in a future value that is exactly (1 + r) times the ordinary annuity future value, where r is the interest rate per period.