GENERAL ANNUITY

DEFINITION OF TERMS

• ANNUITY PAYMENT
• If the payment for each period is fixed, and the compound interest rate is
fixed over a specified time.
• ORDINARY ANNUITY
• The payment is made at the end of each period.
• ANNUITY DUE
• If the payment is due at the beginning of the each period
• PERIODIC PAYMENT
• Each payment in an annuity
• PAYMENT INTERVAL
• The time between the successive payments dates of an annuity.
• TERM OF THE ANNUITY
• The interval between the beginning of the first payment period and the end
of the last payment period .
• ANNUITY
• A fixed sum of money paid to someone at regular intervals, subject to a fixed
compound interest rate.
• ANNUITY CERTAIN
• Payable for a definite duration. Begins and ends on a definite or fixed date
(monthly payment of car loan).
• SIMPLE ANNUITY
• Interest conversion or compounding period is equal or the same as
the payment interest.
• GENERAL ANNUITY
• Interest conversion or compounding period is unequal or not the
same as the payments interval.
• ORDINARY ANNUITY (A)
• Annuity in which the periodic payment is macde at the end of each payment.
• DEFERRED ANNUITY
• The periodic payment is not made at the beginning nor at the end of
each payment interval, but some later date.
• GENERAL ORDINARY ANNUITY
• First payment is made at the end of every payment interval.
• GENERAL ANNUITY DUE
• First payment is made at the beginning of every payment interval.
• PERPETUITIES
• A series of periodic payments which are to run infinitely or forever.
EXAMPLES OF ANNUITIES
• Rent payment
• Pension
• Monthly payment of car loan or mortage.
SIMPLE ORDINARY ANNUITY
Future Value of Simple Ordinary Present Value of Simple Ordinary
Annuity Annuity
• •
SIMPLE ANNUITY DUE
Future Value of Simple Ordinary Present Value of Simple Ordinary
Annuity Annuity
• •
REGULAR PAYMENT (P) of an ANNUITY
Simple Ordinary Annuity Simple Annuity Due
• •
DEFERRED ANNUITY
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