Answer
The ordinary annuity factor is multiplied by (the sum of 1 and the interest rate) to obtain the "future value of annuity due factor". To elaborate, the computation of the interest factor for an annuity due that takes 10 periods at a compound interest rate of 15% is:
Ordinary due interest factor =20.30372
The annuity due factor = 20.30372 x (1 + 0.15)
=23.239278
Work Step by Step
The ordinary annuity factor is multiplied by (the sum of 1 and the interest rate) to obtain the "future value of annuity due factor". To elaborate, the computation of the interest factor for an annuity due that takes 10 periods at a compound interest rate of 15% is:
Ordinary due interest factor =20.30372
The annuity due factor = 20.30372 x (1 + 0.15)
=23.239278