A sequence of equal payments made/received at equal intervals of time is called annuity.

**Annuities**

A sequence of equal payments
made/received at equal intervals of time is called **annuity**. The amount of regular payment of an annuity is called** periodic payment**. The** **time interval between two successive
payments is called **payment interval**
or **payment** **period**. Note that, the payment period may be annual, half yearly,
quarterly, monthly** **(or) any fixed
duration of time. The time interval between the first payment and the last
payment of an annuity is called **term of
an annuity**.

The sum of all payments made and
interest earned on them at the end of the term of annuities is called future
value of an annuity. The present or capital value of an annuity is the sum of
the present values of all the payments of the annuity at the beginning of the
annuity of purchase the payments due in future. Here we note that unless
mentioned specifically, the payment means yearly payment.

Tags : Financial Mathematics , 11th Business Mathematics and Statistics(EMS) : Chapter 7 : Financial Mathematics

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11th Business Mathematics and Statistics(EMS) : Chapter 7 : Financial Mathematics : Annuities | Financial Mathematics

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