Future Value of Annuity Due Calculator

Understanding the future value of an annuity due (FVAD)

An annuity due is a series of equal, periodic cash flows where each payment occurs at the very beginning of each period rather than at the end. Because money is deposited on day one of every cycle, each contribution spends an extra compounding interval in the market generating compound interest.

This contrasts with an ordinary annuity, where payments are made at the close of each period. Common real-world examples of annuities due include residential rent payments, equipment leases, life insurance premiums, and early-month retirement savings contributions. Understanding how beginning-of-period funding boosts compounding returns allows investors and savers to quantify the exact financial advantage of front-loading deposits. If you want to compare this against end-of-period installments, check our future value of annuity calculator. If your recurring payments increase annually rather than staying flat, use our future value of growing annuity calculator. To determine the exact monthly contribution required to reach a specific future savings milestone, use our Goal SIP calculator.

The annuity due formula and mathematical derivation

The future value of an ordinary annuity ($FVA$) calculates the sum of periodic cash flows ($PMT$) compounding across $n$ intervals at periodic interest rate $i$:

Because an annuity due deposits each payment at the beginning of each cycle, every single deposit earns compound interest for exactly one additional period. Mathematically, the entire ordinary annuity expression is multiplied by the single-period compound growth factor $(1 + i)$. To inspect these factor tables across terms and interest rates, compare them with the FVIFA calculator.

If the account begins with an existing lump-sum balance ($P$), that starting principal also compounds across all $n$ periods:

Variable definitions

• PMT (Periodic Payment): The fixed cash deposit made at the start of each interval (for instance, monthly or annually).
• i (Periodic Interest Rate): The annual nominal interest rate divided by the number of compounding periods per year (annual rate / m).
• n (Total Compounding Periods): The total number of payments and compounding intervals (years × m).
• P (Initial Balance): Any existing balance already growing in the account before periodic contributions commence.

Step-by-step published worked example

To see the formula in practice, consider an investor depositing $1,000 at the start of each year into an index fund averaging a 5% annual return over a 5-year investment horizon.

1. Identify key variables: PMT = $1,000, periodic rate i = 0.05, n = 5 years, with payments occurring at the beginning of each year.
2. Calculate the ordinary annuity baseline:
   $$FV_{\text{ordinary}} = 1{,}000 \times \left[ \frac{(1 + 0.05)^5 - 1}{0.05} \right] = 1{,}000 \times 5.525631 = \$5{,}525.63$$
3. Apply the annuity due adjustment factor $(1 + i)$:
   $$FV_{\text{due}} = \$5{,}525.631 \times (1 + 0.05) = \$5{,}801.91$$
4. Evaluate the timing benefit: Over 5 years, total deposits equal $5 \times \$1,000 = \$5,000$. The annuity due generates $801.91 in interest, compared to $525.63 for an ordinary annuity. Funding at the beginning of each year creates $276.28 in extra compound growth on the identical capital contribution.

Ordinary annuity vs. annuity due comparison

The table below contrasts how payment timing alters outcomes across multiple horizons, assuming $1,000 annual contributions earning 7% annual compound growth:

Notice that the relative advantage is always exactly equal to the periodic return rate (here 7.0%). For long-term goals such as retirement planning, that compounding gap compounds into thousands of dollars of free portfolio growth without requiring an extra dollar of out-of-pocket capital. You can model simple single lump-sum compound growth using our future value calculator or evaluate general annuities with our annuity calculator.

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