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


retiring bonds journal entryinterest rate per compounding periodcash receipts journal templateblank ledgerhow to calculate contribution margin ratioaccounting contra accountsdefine prepayment in accountingdebiting and creditingmanufacturing overhead allocated formularequisition slip form samplenumber of days sales in receivables formulastraight line method amortizationexample accounting worksheetcalculate gearing ratio from balance sheetaccounting mcqs testquick assets ratio formulalong term borrowings definitionhow to calculate manufacturing overhead applied to work in processbond amortization effective interest methodbank cheque definitionbasic p&l statementdef of suspensestraight-line depreciation method examplesaccounting multi step income statementcompute the contribution margin ratiohow to calculate net profit margin ratioroyalty payments accounting treatmentnper 3dividends declared journal entryexcel spreadsheet accountingfixed asset turnover interpretationjournal entry for warrantycredit debit cheat sheetnominal and effective interest rates formulais prepaid expense a liabilityintangibles on balance sheetledger accounts exampleexample of gearing ratiohow to calculate depreciation using double declining methodbeginning bookkeepingclosing dividends to retained earningsaccounting equation and balance sheetaccounts payable reconciliation templateaccounting equestioninventory count templateasset disposal journal entryjournal entries for accrued incomeaccounts receivable aging templateexamples of journal entries with narrationwhat are the principles of book keepingwhat is the definition of bookkeepingbills receivable and bills payablehow to calculate receivable turnoverjournal entries for periodic inventory systemlump sum cash flowcvp income statement examplecalculating bad debt expensewarranty reserve accountingtrial balance spreadsheetmarkup and marginledger samplesexamples of cash receipts journalconvert cash calculatoraccounting equation and balance sheetpayroll accrual entryperpetual system inventorydifference between notes payable and accounts payableperiodic quizratio to unit rate calculatorstraight line depreciation schedule excelwhat is the purpose of closing entries in accountingmarkup formulajob costing formulaprofit margin spreadsheetbond formula excelwhat is days sales in receivablesshipping fob meansformula for npv in excelowners equity is increased bypresent value ordinary annuity calculatorwhat is bills receivable in accountingperpetual inventory system and periodic inventory system