Once (1+r) is factored out of future value of annuity due cash flows, it becomes equal to the cash flows from an ordinary annuity. Therefore, the future value of an annuity due can be calculated by multiplying the future value of an ordinary annuity by (1+r), which is the formula shown at the top of the page.

How do you find the future value of a series of payments?

P = PMT [((1 + r)n – 1) / r] This value is the amount that a stream of future payments will grow to, assuming that a certain amount of compounded interest earnings gradually accrue over the measurement period.

How is the FV of an annuity due calculated?

The FV of annuity due calculation is only effective with a fixed interest rate and equal payments during the set time period. You can use the future value of an annuity due calculator below to quickly work out the potential cash flow of monthly payments by entering the required numbers.

What is the future value of an annuity?

The term “future value of an annuity” refers to the future value of the string of consecutive and equal payments that are likely to be made in the future. Further, annuity due indicates that the payments are done at the beginning of the time period.

How is the due payment formula used in annuities?

The annuity due payment formula using future value is used to calculate each equal cash flow or payment of a series of cash flows when the future value is known. This formula is specific to annuities where the initial cash flow is received immediately.

When to use the payment from future value formula?

The annuity payment from future value formula is primarily used by investors to calculate the amount of savings they need to make periodically to achieve their targeted financial saving goals. It is worth noting that this formula will be applicable only if the cash flow happens at the end of each period.