FM: Place a deferred annuity at the correct valuation date
An annuity-immediate factor values payments one period before the first payment. Deferral problems become much easier when you mark that date before applying discounting. A correct annuity factor at the wrong date still gives a wrong answer.
Worked example or practice scenario
Payments of 100 occur at times 4, 5 and 6, with annual effective interest 5%. The value at time 3 is 100 a-angle-3. The value at time 0 is v³ × 100 a-angle-3 ≈ 235.25. It is not v⁴ times that factor.
Try this next
Calculate the value directly as 100(v⁴+v⁵+v⁶). Then move the first payment to time 3 and explain which discount exponent changes. Draw the timeline before using your calculator.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.
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