Annuity Due Payment Formula FV

Formula

Pmt = FV x i / ((1 + i)( (1 + i)n - 1 ))
Variables used in the annuity formula
FV = Present Value
Pmt = Periodic payment
i = Discount rate
n = Number of periods

Use

This annuity due payment formula FV calculates the annuity payment required to provide a given future value (FV). The annuity due formula assumes payments are made at the start of each period for n periods, and a discount rate i is applied.

The annuity due payment formula FV can be used for example, to calculate the periodic deposits needed at the start for each period to provide a required savings account balance (FV), given the number of deposits (n), and the account interest rate (i).

Excel Function

The Excel PMT function can be used instead of the annuity due payment formula FV, and has the syntax shown below.

PMT(Rate, Nper, PV, FV, Type)

*In this instance, the PV argument is not used when using the Excel Annuity due payment function.

Example Using Annuity Due Payment Formula FV

An investor wants to save an amount of 8,000 by depositing regular annuity payments at the start of each period for 15 periods at an interest rate of 4% per period. The amount of the annuity payment is given by the annuity due payment formula FV as follows:

Annuity payment = Pmt = FV x i / ((1 + i)( (1 + i)n - 1 ))
Annuity payment = Pmt = 8000 x 4% / ((1 + 4%)( (1 + 4%)15 - 1 ))
Annuity payment = Pmt = 384.16

The same answer can be obtained using the Excel PMT function as follows:

Annuity payment = PMT(Rate, Nper, PV, FV, Type)
Annuity payment = PMT(4%,15,,-8000,1)
Annuity payment = 384.16

The annuity due payment formula FV is one of many annuity formulas used in time value of money calculations, discover another at the links below.

Annuity Due Payment Formula FV November 6th, 2016Team

You May Also Like


Related pages


standard costing method examplejob costing formulafixed asset turnover ratio formula examplereplenish petty cash fund journal entrywhat is an imprest accountnominal and effective interest rates formuladefine fob shippinghow to calculate bond premium amortizationformula for pay back periodbank reconciliation statement pdf notesgarnished definitionfob shippingpmt function exampleperiodic vs perpetual inventory systemjournal entries to record cash dividends are made on theprintable ledger balance sheetfinancial accounting adjusting entriespresent annuity calculatordefine debitorsaccounts receivable to sales ratiodays sales in receivable formulatreatment of deferred tax liability in cash flow statementdebits and credits t accountsamortised valuewhat does eom meanaccounting for leases lessorpetty cash liquidationaccounting cash receipts journalno coupon bondhow to calculate straight line depreciationhow to figure out markup percentaget accounts and journal entrieshow to calculate pmt in excelprepare multiple step income statementhorizontal income statementlease amortization schedule templatedebit and credit quizcontra revenuesformula for contribution margin ratioannuity future value formulainterest coverage ratio formula exampleaccounts receivable templatespetty cash book template free downloaddouble decline depreciation calculatorfv function exceldupont formula calculatorincome statement projection templatepremium on bonds payabledebtors control account examplethe accounting cycle explainedformula roatransposition errorsdouble declining balance depreciation tableaccrued expense entryprovision for doubtful debts double entryaccounting rate of return disadvantageshow do i calculate markuptvc calculationsecurity coverage ratio formulapmt function calculatoris accumulated depreciation a contra accountdeferred tax liability accounting entrycredit card expense journal entryprice variance formula accountingdebits in accountingnpv formula constant cash flowwhy accumulated depreciation is creditpv annuitydifference between bank statement and bank reconciliationaccounts receivable flowchart exampleamortised cost accountingbookkeeping to trial balance examplesdeferred expenses meaningnormal balance for accounts payable