Simple Annuity Flashcards
time between the first payment interval and last payment interval.
term of an annuity or t
the amount of each payment
regular payment or R
sum of future values of all payments to be made during
the entire term of the annuity
amount of an annuity or Future Value
sum of present value of all the payments to be made during the
entire term of the annuity
present value of an annuity or P
the compounding frequency (e.g. could be quarterly, annually, monthly, etc…)
frequence conversion or m
an annuity where
the payment interval is the same as
the interest period
simple annuity
an annuity where
the payment interval is not the same
as the interest period
general annuity
a type of annuity in
which the payments are made at the
end of each payment interval
ordinary annuity
a type of annuity in
which the payments are made at
beginning of each payment interval
annuity due
what is the formula for present value?
P = R 1 - (1 + i)^-n / i
what is the formula for future value?
F = R (1 + i)^n - 1 / i
what is the formula for interest rate?
i = r / m
where __ is the regular payment
R
where __ is the interest rate per period
i
where __ is the number of payments
n
where __ is the nominal rate
r
where __ is the number of conversion periods
m
