{"id":49405,"date":"2025-12-08T14:11:30","date_gmt":"2025-12-08T14:11:30","guid":{"rendered":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-module\/lessons\/lesson-5-annuity-due-5\/"},"modified":"2025-12-08T14:11:30","modified_gmt":"2025-12-08T14:11:30","slug":"lesson-5-annuity-due-5","status":"publish","type":"lesson","link":"https:\/\/certifeka-edu.com\/ar\/programs\/finance-for-strategic-managers-accounting-module\/lessons\/lesson-5-annuity-due-5\/","title":{"rendered":"Lesson 5: Annuity due"},"content":{"rendered":"

\"\"<\/p>\n

Lesson 5 Due annuities time value<\/h2>\n

Annuity due<\/h3>\n

\"\"<\/p>\n

We now turn our attention to annuities due. Remember that the cash flows of an annuity due occur at the start of the period.<\/h5>\n
In other words, if we are dealing with annual payments, each payment in an annuity due comes one year earlier than it would in an ordinary annuity<\/h5>\n
This, in turn, means that each payment can earn an extra year’s worth of interest, which is why the future value of an annuity due exceeds the future value of an otherwise identical ordinary annuity.<\/h5>\n

\"\"<\/p>\n

This, in turn, means that each payment can earn an extra year’s worth of interest, which is why the future value of an annuity due exceeds the future value of an otherwise identical ordinary annuity.<\/h5>\n

\"\"<\/p>\n

Finding the Future value of Annuity due
\nIn this equation<\/h5>\n
(r) represents the interest rate<\/h5>\n
(n) represents the number of payments in the annuity.<\/h5>\n
“The calculations required to find the future value of annuity due are illustrated in the following example”
\nPV of Annuity due Example<\/h5>\n

\"\"<\/p>\n

Braden Company, a small producer of plastic toys, wants to determine the most it should pay to purchase (PV) a particular due annuity. The annuity consists of cash flows of $700 at the beginning of each year for 5 years. The firm requires the annuity to provide a minimum return of 8%. This situation is depicted in the following timeline:
\nAnswer from applying equation: $3018.49<\/h5>","protected":false},"comment_status":"open","ping_status":"closed","template":"","class_list":["post-49405","lesson","type-lesson","status-publish","hentry"],"yoast_head":"\nLesson 5: Annuity due - Certifeka-edu<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/certifeka-edu.com\/ar\/programs\/finance-for-strategic-managers-accounting-module\/lessons\/lesson-5-annuity-due-5\/\" \/>\n<meta property=\"og:locale\" content=\"ar_AR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lesson 5: Annuity due - Certifeka-edu\" \/>\n<meta property=\"og:description\" content=\"Lesson 5 Due annuities time value Annuity due We now turn our attention to annuities due. Remember that the cash flows of an annuity due occur at the start of the period. 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