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Florida Business Park
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Hello & welcome. In this tutorial we will will be solving problems involving annuity due In an annuity due, periodic payments are made at the beginning of a payment period. It could also also be that the preiodic payments are made in advance or before the service is received. Examples are retirement annuity payments, rent payments and insurance payments. Let us look at an example Example 1: Find the future value of $400 payments made at the beginning of every month for five years if interest is 4.2% compounded quarterly. To begin we need to set our calculator to annuity due mode. That is, BEGIN mode. To do that we press 2ND BEGIN, that is, the payment (PMT) botton 2ND SET, you see BGN mode is displayed and then 2ND QUIT. We now have BGN displayed on the screen which means we are in BGN mode Next we set P/Y and C/Y.
We do that by pressing 2ND P/Y In this question, payments are made every month so we set the P/Y to 12 ENTER scroll down and interest is compounded quarterly we set C/Y to 4 ENTER and then 2ND QUIT Next we find N. Payment is made every month for 5 years so that is, five times twelve so in total we have 60 payments made, then we press N interest rate is 4.2 I/Y. We don't have present value so we set that zero. 0 present value Payments are $400 payments so $400. This is an outlay, payments are being made, so we make that negative PMT and then compute Future Value So the future value is $26 737.43. And that's how to use the BA II Plus for annuity due calculations To set your calculator back to END mode just follow the same process again 2ND BGN, 2ND SET, you see now, it's in END mode, 2ND QUIT.
And now the BGN is no longer on screen which means you're now in END mode. To go back to the BGN mode, 2ND 2ND BGN, 2ND SET, 2ND QUIT and now you're in BGN mode again. Thanks for watching..