CFA CFA Level 1 TVM Anyone has methods/exercices for easily solving annuity due problems?

# TVM Anyone has methods/exercices for easily solving annuity due problems?

• Author
Posts
• 0

Hello everyone!!

Question on TVM

I’d be glad to have a good technique to easily solve annuity due problems
(Diagrams, etc)

Thx

• vincentt
Participant
• CFA Level 3
1

Hi @chewbaKaâ€Œ , are you referring to the calculation of FV for annuity due?

In case you are, there are 2 approaches to this:

1. To use the BGN, and do your calculation as though it’s a normal FV calculation (non annuity due):

Steps to switch between BGN and END

â€¢ Press [2ND] [BGN] to display the BGN/END worksheet. (Resetting the unit sets this to END, not BGN.)
â€¢ Press [2ND] [SET] to change to beginning-of-period payments. BGN is displayed.
â€¢ Press [2ND] [SET] again to return the setting to end-of-period payments. END is displayed.
â€¢ Press [2ND] [QUIT] to exit.

2. To multiply the non-annuity due’s FV by the rate for the period.

For example:
N = 10; Rate = 9%

After computing the FV, you just multiply FV by 1.09 to get the FV for annuity due.

My preferred method as it’s much quicker.

• mitch895
Participant
• CFA Charterholder
1

Agree with @vincentt – get to know your calculator. Once you get the hang of which buttons/functions do what, you’ll save a bucket load of time (and there’s less chance you’ll stuff something up).

• 1

sure. after practicing, doesnt seem that hairy to me (and i’m chewbaka ðŸ˜‰ )