annuaties 2

• Annuity is an amount to be paid, usually in equal amounts at equal time intervals.
• Common applications of annuities include rental houses, retirement, and condominiums.
• Examples of annuities include ordinary annuity, mortgage, student loan, annuity due, rental payment, and life insurance.
• The present and future values of an ordinary annuity paying 1,500 for 12 years can be calculated using the formula: PV = 0.03.
• If money is worth 8% compounded monthly, the present value and the future value of annuity due paying 2,500 monthly for a term of two years can be calculated using the formula: PV = 0.00666666667.