Amount ,Present Value and Periodic Payment of Annuity Due

 Annuity Due

An annuity due is one for which the first payment occurs immediately . It is also defined as an annuity in
which payments are made at the beginning of each period .

The following symbols are used in dealings with annuity due formulas;

Where:

A = present value of an annuity due

S = amount of an annuity due

R =periodic payment of the annuity due

i =interest per conversion period

n = total number of payment

Present Value of an Annuity Due

The present value of an annuity due ,which is denoted by A , is the sum of the present values of the
payment

The formula in finding the present value of an annuity due is:

A = {1st payment} +{ present value of remaining payments}Amount ,Present Value and Periodic
Payment of Annuity Due
 Annuity Due

An annuity due is one for which the first payment occurs immediately . It is also defined as an annuity in
which payments are made at the beginning of each period .

The following symbols are used in dealings with annuity due formulas;

Where:

A = present value of an annuity due

S = amount of an annuity due

R =periodic payment of the annuity due

i =interest per conversion period

n = total number of payment

Present Value of an Annuity Due

The present value of an annuity due ,which is denoted by A , is the sum of the present values of the
payment

The formula in finding the present value of an annuity due is:

A = {1st payment} +{ present value of remaining payments}

Marlon purchased a car. He paid ₱ 150,000 down payment and ₱10,500 payable at the beginning of
each month for 5 years. If money is worth 12% compounded monthly, what is the equivalent cash price
of the car.

Example 2

Jessner Gomez, a college student of the university of the East, is granted a scholarship which will pay ₱
6,500 at the beginning of each month for 4 years. If money is worth 18% compounded monthly, find the
present value of the scholarship.

The formula in findings the amount of an annuity due is:

S ={Value of an annuity of (n+1)payments on the last payment date}-R

What equal deposits should be placed in a fund at the beginning of each year for 15 years to have
P1,500,000 in the fund at the end of 15 years money accumulate 12%.

Example 2

Aaron agrees to make equal payments at the beginning of each 3 months for 10 years ,to pay all
interest and principal in purchasing a house and lot worth P 5,000,000 cash .If money is worth 18%
compounded quarterly ,find the quarterly payment.Example 2

Aaron agrees to make equal payments at the beginning of each 3 months for 10 years ,to pay all
interest and principal in purchasing a house and lot worth P 5,000,000 cash .If money is worth 18%
compounded quarterly ,find the quarterly payment.