Annuity

Published on May 2016 | Categories: Documents | Downloads: 32 | Comments: 0 | Views: 549
of 2
Download PDF   Embed   Report

Comments

Content


E
N
G
I
N
E
E
R
I
N
G

E
C
O
N
O
M
I
C
S
Essentials in General Engineering and Applied Sciences
Annuity
Annuity is a series of uniform payments made at equal intervals of
time. Annuities are established as payment for a debt by a series of
equal payment at equal time intervals or as amortization. It may.
also be a substitute periodic payment for a future lump sum
payment.
Types of Annuity
1. Ordinary Annuity
2. Annuity Due
3. Deferred Annuity
4. Perpetuity
Ordinary Annuity - a type of annuity wherein the payments are
made at the end of each period starting from the first period.
O
o -
R
CashFlowDiagram
(OrdinaryAnnuity)
1 2 3 4,, (n—1) n
m m r i
A A A A A A
„ A[(l+i)n - 1]
F=--------:--------
p_ A[1 - ( 1+1) - ]
Where:
A = periodic equal payment
n = no. of periods
i = interest rate per payment
P = present worth
F = future worth
________________ [7
f
Essentials in General Engineering and Applied Sciences
Deterred Annuity - a type of annuity wherein the first payment is
made later than the first or is made several periods after the
beginning of annuity.
Cash Flow Diagram
(Deferred Annuity)
O 1
£ - J — S—32
P
l<-
n
r r m
A A A A A
> F
rn -t- n p e r i o d s
n p e r i o d s
F=
A[(l+i)n-l]
A=
A[(l+i)n-l]
i(l+i)m+n
Where:
A = periodic equal payment
n = no. of periods
i = interest rate per payment
P = present worth
F = future worth
m= no. of periods before the
beginning of the first
payment
_____________________ t ?
Annuity Due - a type of annuity wherein the payment is made at
the beginning of each period.
Cash FlowDiagram
(Annuity Due)
5 yVa . <n -----—
rT T T T T T l
A A A A A A A

- -f- -
-■3*4 F
F*
K-
n-- 1 periods




525 i
E
N
G
I
N
E
E
R
I
N
G

E
C
O
N
O
M
I
C
S

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close