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Quick note: When calculating regular annuities, payments are made at the end of each period. Here we will look at how to calculate annuities at the start of each period, known as an annuity due.
Annuity due formula: PV=PMT[(1−(1+i)^(−n))/i](1+i)
Q1. What amount will Magdalene need in her Retirement Plan on the day she retires if she wants to receive $3,500 at the beginning of every month for 24 years and the plan earns 6% compounded monthly?
Q2. If payments of $1440 are to be made at the beginning of every month for the next 12 years at an interest rate of 7.2% compounded monthly, what is the present value of the annuity?