Future Value of an Annuity

An annuity is a series of equal payments made at fixed intervals for a specified number of periods. For example, $100 at the end of each of the next three years is a three-year annuity. The payments are given the symbol PMT, and they can occur at either the beginning or the end of each period. If the payments occur at the end of each period, as they typically do, the annuity is called an ordinary, or deferred, annuity. Payments on mortgages, car loans, and student loans are typically set up as ordinary annuities. If payments are made at the beginning of each period, the annuity is an annuity due. Rental payments for an apartment, life insurance premiums, and lottery payoffs are typically set up as annuities due. Since ordinary annuities are more common in finance, when the term "annuity" is used in this book, you should assume that the payments occur at the end of each period unless otherwise noted.

Was this article helpful?

0 0
Sell Your Annuity

Sell Your Annuity

Do you have annuity you dont want? Discover When is it Time to Sell Your Annuity? What can I do? Where can I get the money I need? I have an annuity, but I dont know that I can sell it. Is there a good time to sell my annuity? I already have a home improvement loan, but it was used before the roof needed replacing.

Get My Free Ebook


Post a comment