ANNUITY Flashcards
A sequence of equal periodic payments made at equal intervals for purposes of either paying off indebtedness or creating a fund. “Hulugan”
Annuity
7 Examples of Annuity
- monthly payment of rent
- monthly wages / salaries
- premiums of insurances
- pensions
- payments or installment purchases
- leases
- mortgages
interest conversion or compounding period is equal as the payment interval.
- installment payment for an appliance at the end of each month with interest compounded monthly.
Simple
Interest conversion or compounding period is not equal as the payment interval
- installment payment for an appliance at the end of each month with interest compounded annually
General
paid or received at the end of time
- salaries are given every 30th of the month
Ordinary annuity
paid or received at the beginning of the time period
- rent are given every 1st of the month
Annuity Due
payments are delayed for a period of time
- you can have your PAG-IBIG loan after 24 monthly savings contributions
Deferred Annuity
term is fixed, contract states the beginning and end dates
- mortgage/sangla
Annuity Certain
no fixed term, depends on uncertain events
, - life insurance, room for rent
Contingent Annuity
continues indefinitely
- royalties, patent, and copyright
Perpetuity
The time between each payment in an annuity
Payment interval
The total duration from the start of the first payment to the end of the last payment in an annuity
Term of an Annuity
The regular amount paid or deposited at each schedules interval in an annuity
Periodic Payment
The total value accumulated at the end of the annuity term, comprising all compounded payments
Amount of an Annuity
The initial lump sum or amount invested at the beginning of an annuity term
Present Value of an Annuity
