BAR Time Value of Money · Updated November 2026
Annuity Due or Ordinary Annuity: Is the Payment at the Beginning or End?
The only structural difference is payment timing, but that timing changes present and future value.
Ordinary annuity
Payments occur at the end of each period.
Annuity due
Payments occur at the beginning of each period.
Value difference
With the same payment, rate, and number of periods, an annuity due generally has a higher present and future value because each cash flow occurs one period earlier.
Exam clue
Words like beginning of each year or payment immediately point toward annuity-due logic.
The takeaway
Ordinary annuity pays at the end of each period. Annuity due pays at the beginning, so each payment generally earns or discounts for one additional period.
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FAQ
Which annuity pays at period end?
Ordinary annuity.
Which generally has higher present value, all else equal?
Annuity due.
Can lease payments use annuity concepts?
Yes.