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Annuity Due

An annuity due has payments at the start of each period.

$$P=A\left(\frac{(1+i)^{n-1}-1}{(1+i)^{n-1}i}\right)+A$$
$$F=A\left(\frac{(1+i)^{n+1}-1}{i}\right)-A$$

Problem 36: Annuity Due Present Value

An engineer receives P25,000 at the beginning of each year for 18 years. Find the present value at 4% compounded annually at the time of the first payment.

$$P=25000\left(\frac{(1.04)^{17}-1}{(1.04)^{17}(0.04)}\right)+25000=329,142$$

Final answer: P329,142.

Problem 37: Quarterly Annuity Due

A student receives P3,000 at the beginning of each 3 months for 4 years. Find the sum at the end of 4 years at 6% compounded quarterly.

$$i=0.06/4=0.015, \quad n=16$$
$$F=3000\left(\frac{(1.015)^{17}-1}{0.015}\right)-3000=54,604$$

Final answer: P54,604.

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