The purpose of the future value annuity due tables (FVAD tables) is to make it possible to carry out annuity due calculations without the use of a financial calculator.
They provide the value at the end of period n of 1 received at the beginning of each period for n periods at a discount rate of i%. The tables are based on the future value of an annuity due formula.
FV = Pmt x (1 + i) x ((1 + i)n - 1) / iFuture value annuity due tables are used to provide a solution for the part of the formula shown in red. Additionally this is sometimes referred to as the future value annuity due factor.
FV = Pmt x Future value annuity due factorThe tables are usually presented in a grid format. The rows representing the number of periods and columns representing the interest rate. Each cell in the table represents the future value factor for a specific combination of periods and interest rate. The future value factor is multiplied by the payment amount to determine the future value of the annuity.
Future Value Annuity Due Tables Example
To illustrate suppose a business receives 2,000 at the beginning of a each year for 9 years. If the discount rate is 3% what is the future value of the annuity?
Since the payments are received at the beginning of each year the annuity due formula can be used to calculate the future value.
Using the Formula
The calculation using the formula is as follows.
Pmt = 2,000 n = 9 i = 3% FV = Pmt x (1 + i) x ((1 + i)n - 1) / i FV = 2,000 x (1 + 3%) x ((1 + 3%)9 - 1) / 3% FV = 20,927.80
Using the Tables
Alternatively the tables can be used to calculate the future value.
The FV annuity due factor is found using the tables below by looking along the row for n = 9, until reaching the column for i = 3%. Accordingly the value given by the tables highlighted in yellow is 10.4639
Using this value the future value can now be calculated as follows.
Pmt = 2,000 n = 9 i = 3% FV = 2,000 x Future value of annuity due factor for n = 9, i = 3% FV = 2,000 x 10.4639 FV = 20,927.80
As can be seen the answer is the same in both cases.
t’s important to realize that the FVAD tables assume that payments are made at the beginning of each period. If payments are made at the end of each period, a different set of tables, called future value ordinary annuity tables, must be used.
Future Value Annuity Due Tables Download
The future value annuity due table is available for download in PDF format by following the link below.
Summary
FVAD tables are a financial tool used to determine the FV of a series of equal payments, where each payment is made at the beginning of each period, rather than at the end. These tables are used in financial calculations such as loan amortization, lease payments, and other types of annuities. They provide a quick and easy way to calculate the future value of a series of payments, based on a specific interest rate and time period.
Future value annuity due tables are one of many time value of money tables, discover another at the links below.
Users use these FVAD tables at their own risk. We make no warranty or representation as to its accuracy. Additionally we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a future value of an annuity due table that you might use when considering how to calculate annuity due values. It is purely illustrative of a FVAD table. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in these time value of money tables, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.