Annuity Due

Annuity Due can be explained as a series of payments that posses certain characteristics as compared to the other form of the payments. The first characteristic of this kind of payment is that all payments are of same amount that are included in the series. This means if one payment is done of $500 all the other payments will also be of $ 500. All the payments of the annuity due are paid after equal interval of time that means if payments are done on yearly or quarterly biases all the payments will follow the similar schedule. All the payments are made on the beginning of the period for example if one payment is made on the first of every month every other payment will also be done on the same date of the next month.

The annuity due ensures that payments are made sooner as compared to the simple annuity payments. This means that annuity due payments are made on the beginning of each month where as the simple annuity payments are done at the end of each month. The present value of the annuity due is more as compared to the simple annuity. Examples of annuity due can be of a Company that acquires manufacturing equipment on lease from the supplier and they have to pay $500 for three years at the beginning of each month of every year. As the payment is made at the beginning of the month at regular interval and of same amount then it is the example of the annuity due.

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