There are different FV calculations for annuities due and ordinary annuities The Present Value (PV) of an annuity can be found by calculating the PV of each

The following formula is used to calculate future value of an annuity: R = Amount an annuity i = Interest rate per period n = Number of annuity payments (also the number of compounding periods) PV: Stands for Present Value of Annuity PMT: Stands for the amount of each annuity payment r: Stands for the Interest Rate n: Stands for the number of periods in which payments are made The above formula pertains to the formula for ordinary annuity where the payments are due and made at the end of each month or at the end of each period. A growing annuity due is sometimes referred to as an increasing annuity due or graduated annuity due. The formula discounts the value of each payment back to its value at the start of period 1 (present value). When using the formula, the discount rate (i) should be greater than the growth rate (g).

The future value of an annuity due is higher than the future value of an (ordinary) annuity by the factor of one plus the periodic interest rate. This is because due to the advance nature of cash flows, each cash flow is subject to compounding effect for one additional period. Formula to Calculate Future Value of Annuity Due. Future value of annuity due is value of amount to be received in future where each payment is made at the beginning of each period and formula for calculating it is the amount of each annuity payment multiplied by rate of interest into number of periods minus one which is divided by rate of interest and whole is multiplied by one plus rate of interest. The future value of an annuity is the total value of payments at a specific point in time. The present value is how much money would be required now to produce those future payments.