when to switch to BGN mode?
- Thread starter InesGHALI
- Start date
Hello - BGN just specifies that payments are made at the beginning of the period. To my knowledge you will not need this for the FRM (I'm not fully sure about part 2)
Payments at the beginning of period occur in the case of leases or annuity due. If you reproduce the example in the spreadsheet attached you will see the diff (screenshot below) . Essentially because payment is made at time 0 instead of time 1, you incur 1 additional compounding period in the case of forward values.
If you want to know why payment at beginning or end of period matter you should check out the below
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www.investopedia.com
Payments at the beginning of period occur in the case of leases or annuity due. If you reproduce the example in the spreadsheet attached you will see the diff (screenshot below) . Essentially because payment is made at time 0 instead of time 1, you incur 1 additional compounding period in the case of forward values.
If you want to know why payment at beginning or end of period matter you should check out the below
The Annuity Formula for the Present and Future Value of Annuities
These formulas can show you how to calculate the present value and future value of ordinary annuities and annuities due. That info can aid your financial planning.
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