Annuity

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Annuity
he term annuity is used in finance theory to refer to any terminating stream of fixed payments over a specified period of time. This usage is most commonly seen in discussions of finance, usually in connection with the valuation of the stream of payments, taking into account time value of money concepts such as interest rate and future value.[1] Examples of annuities are regular deposits to a savings account, monthly home mortgage payments and monthly insurance payments.[2]Annuities are classified by payment dates. The payments (deposits) may be made weekly, monthly, quarterly, yearly, or at any other interval of time.

Ordinary annuity
An ordinary annuity (also referred as annuity-immediate) is an annuity whose payments are made at the end of each period (e.g. a month, a year).

Annuity-due
An annuity-due is an annuity whose payments are made at the beginning of each period. [4] Deposits in savings, rent or lease payments, and insurance premiums are examples of annuities due

Amortization
Amortization (or amortisation) is the process of decreasing, or accounting for, an amount over a period. The word comes from Middle English amortisen to kill, alienate in mortmain, from AngloFrench amorteser, alteration of amortir, from Vulgar Latin admortire to kill, from Latin ad- + mort-, mors death. When used in the context of a home purchase, amortization is the process by which your loan principal decreases over the life of your loan. With each mortgage payment that you make, a portion of your payment is applied towards reducing your principal and another portion of your payment is applied towards paying the interest on the loan. An Amortization table shows this ratio of principal and interest and demonstrates how your loan's principal amount decreases over time. Amortization is generally known as depreciation of tangible assets of a firm.

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