annuity due

What is an annuity due?

An annuity due is a rehashing installment that is made toward the start of every period. It has the accompanying qualities:

1. All installments are in the same sum, (for example, a progression of installments of $500). 
2. All installments are made at the same interims of time, (for example, once a quarter or year). 
3. All installments are made toward the start of every period, (for example, installments being made just on the first day of the month).

Since installments are made sooner under an annuity due than under a conventional annuity (where installments are made toward the end of every period), an annuity due has a higher present worth than a common annuity.

Here are a few illustrations of an annuity due:

1. An organization procures a copier through a rent that requires an installment of $250 toward the start of every month for a long time. Since all installments are in the same sum ($250), they are made at normal interims (month to month), and the installments are made toward the start of every period, the installments are an annuity due. 
2. An organization goes into an office lease, under which the lessor requires the organization to make regularly scheduled installments of $12,000 for the following 24 months, no later than the month's start to which every installment applies. Since all installments are in the same sum ($12,000), they are made at standard interims (month to month), and the installments are made toward the start of every period, the installments are an annuity due. 
3. The annuity due idea is less regular than the customary annuity idea, since most installments are made toward the end of a period, not the starting.

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M. SAkram

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