Simple and General Annuity

• What is a sequence of payments made at equal intervals called?

  Annuity
• What are examples of annuity payments?

  Rental payment, monthly pensions
• What does the time between successive payments refer to?

  The interval between payments
• What is the sum of future values of all payments in an annuity called?

  Future value of the annuity
• What are the two types of annuities mentioned?

  1. Simple Annuity
  2. General Authority
• What is the sum of present values of all payments in an annuity called?

  Present value of the annuity
• What is a simple annuity?

  Annuity where payment interval equals interest period
• If monthly payments of P500 have an interest rate of 6% compounded monthly, what type of annuity is it?

  Simple Annuity
• What is a general annuity?

  Annuity where payment interval differs from interest period
• If there are monthly payments of P500 and interest is 6% compounded semi-annually, what type of annuity is this?

  General Annuity
• What is an annuity immediate?

  Annuity with payments made at the end of each interval
• What is a definite annuity?

  Annuity with payments at definite times
• What is an indefinite annuity?

  Annuity with payments over an indefinite length of time
• What are the characteristics of an annuity?

  • Payments made at equal intervals
  • Can be definite or indefinite
  • Can be simple or general
  • Can be immediate or delayed