So I always keep my calculator in END mode and I understand that the calculate PV or FV of an annuity due, I multiply the answer by 1+r
My question is, is there a similar adjustment to be made to get the PMT, N and I/Y of an annuity due if the calculator is in END mode?
I tried a few examples and it seem we need to divide the annuity PMT by 1+r to get the annuity due PMT. Not sure of the others though.
Correct - To convert payments, divide the PMT in END mode by 1+r to get the PMT in Begin Mode.
The reason this works intuitively can be seen when calculating PV - the PV of the annuity is the amount you’d need in a bank account to exactly fund the annuity. You get the benefit of one period’s interest more in an ordinary annuity than in an annuity due. So, the values must differ by a factor of 1+r.
Since for any combination of N and I/Y there’s a fixed ratio between the PMT and the PV (this ratio is the PV of an annuity factor) and the payment, if PV is greater for an annuity due by a factor of 1+r, for a fixed PV, the PMT must be smaller for the annuity due. Likewise for the FV of these annuities.
Unfortunately, there is no shortcut like this for N and I to convert between the two annuities. All you can say is that for an equivalent N, PMT, and PV (or FV), the I/Y will be lower for an annuity due than for an ordinary annuity, and likewise for N (it will be lower for an annuity due than for an ordinary annuity).