The purpose of the present value annuity due tables is to make it possible to carry out annuity due calculations without the use of a financial calculator.
They provide the value now of 1 received at the beginning of each period for n periods at a discount rate of i%.
The present value of an annuity due formula is:
PV = Pmt x (1 + i) x (1 - 1 / (1 + i)n) / i
Present value annuity due tables are used to provide a solution for the part of the present value of an annuity due formula shown in red, this is sometimes referred to as the present value annuity due factor.
PV = Pmt x Present value annuity due factor
Annuity Due Tables Present Value Example
What is the present value of 3,000 received at the end of each year for 9 years, if the discount rate is 5%?
Pmt = 3,000 n = 9 i = 5% PV = Pmt x (1 + i) x (1 - 1 / (1 + i)n) / i PV = 3,000 x (1 + 5%) (1 - 1 / (1 + 5%)9) / 5% PV = 3,000 x Present value of annuity due factor for n = 9, i = 5% PV = 3,000 x 7.4632 PV = 22,389.60
The present value annuity due factor of 7.4632, is found using the tables by looking along the row for n = 9, until reaching the column for i = 5%, as shown in the preview below.
Present Value Annuity Due Tables Download
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