What is annuity in general math?
An annuity is a series of equal cash flows, equally distributed over time. If you are paying or receiving the same amount of money every month (or week, or year, or whatever time frame), then you have an annuity.
What is the difference between general annuity and general ordinary annuity?
The most notable difference in ordinary annuities and annuities due is the way they pay out. With ordinary annuities, the payments come at the end of each payment period. With annuities due, the payment comes at the beginning. In general, loan payments are made at the end of a cycle and are ordinary annuities.
What is the difference between simple and general annuity?
The main difference is that in a simple annuity the payment interval is the same as the interest period while in a general annuity the payment interval is not the same as the interest period.
How do you calculate simple annuity and general annuity?
How do you know if a problem is a general annuity?
Definition: A general annuity is an annuity where the payment intervals are not the same as the interest intervals. Example 1: Monthly payments of $500 where interest is 6%/a, compounded monthly. Here the payment interval and the interest interval are the same – 1 month.
How do you know if it is annuity due or ordinary annuity?
An ordinary annuity is when a payment is made at the end of a period. An annuity due is when a payment is due at the beginning of a period.
What are the 3 types of annuities?
The main types of annuities are fixed annuities, fixed indexed annuities and variable annuities.
What is simple and general annuities?
Simple Annuities Due are annuities where payments are made at the beginning of. each period and the compounding period is EQUAL to the payment period (P/Y = C/Y) General Annuities Due are annuities where payments are made at the beginning of.
How do you know if you have a simple or general annuity?
What is a general annuity?
Definition: A general annuity is an annuity where the payment intervals are not the same as the interest intervals. Example 1: Monthly payments of $500 where interest is 6%/a, compounded monthly. Here the payment interval and the interest interval are the same – 1 month.
How do you calculate the present value of an annuity?
Luckily there is a neat formula: Present Value of Annuity: PV = P × 1 − (1+r) −n r. P is the value of each payment. r is the interest rate per period, as a decimal, so 10% is 0.10.
What is an example of an annuity with a payment interval?
Monthly payments of $500 where interest is 6%/a, compounded monthly. Here the payment interval and the interest interval are the same – 1 month. This is an example of an ordinary annuity like those in previous lessons. Suppose there are monthly payments of $500, but the interest is 6%/a, compounded semi-annually.
What is an example of an ordinary annuity?
This is an example of an ordinary annuity like those in previous lessons. Suppose there are monthly payments of $500, but the interest is 6%/a, compounded semi-annually. Here the payment interval is 1 month, but the interest period is 6 months.