Topic 2 - Time And Value For Money Flashcards
1
Q
What is an annuity?
A
It is a series of regular and constant cash flows for a fixed period of time and they are quite a popular investment. Can use annuities to calculate present values of investments
Examples are- regular deposits to a savings account, monthly home mortgage payments, monthly insurances payments and pension payments
2
Q
What is a perpetuity?
A
A series of cash flows that goes on forever, if the person dies with a perpetuity, it is passed onto their heirs. This is a very rare investment
