gen math 2nd q (terms and definitions)

• Lender/Creditor: person or institution who invests the money or makes the funds available
• Borrower/Debtor: person or institution who owes the money or avails of the funds from the lender
• Origin/Loan date: date on which money is received by the borrower
• Repayment date/Maturity date: date on which the money borrowed or loan is to be completely repaid
• Time/Term (t): amount of time in years the money is borrowed or invested; length of time between the origin and maturity dates
• Principal (P): amount of money borrowed or invested on the origin date
• Rate (r): annual rate, usually in percent, charged by the lender, or rate of increase of the investment
• Interest (I): amount paid or earned for the use of money
• Simple Interest (Is): interest that is computed on the principal and then added to it
• Compound Interest (Ic): interest is computed on the principal and also on the accumulated past interests
• Maturity value/Future value (F): amount after t years that the lender receives from the borrower on the maturity date
• Simple Annuity: an annuity where the payment interval is the same as the interest period
• General Annuity: an annuity where the payment interval is not the same as the interest period
• Ordinary Annuity (or Annuity Immediate): payments are made at the end of each payment interval
• Annuity certain: payments begin and end at definite times
• Annuity Due: payments are made at the beginning of each payment interval
• Contingent Annuity: payments extend over an indefinite (or indeterminate) length of time
• Term of an annuity (t):

  • Time between the first payment interval and last payment interval
• Regular or Periodic payment (R):

  • The amount of each payment
• Amount (Future Value) of an annuity (F):

  • Sum of future values of all the payments to be made during the entire term of the annuity
• Present value of an annuity (P):

  • Sum of present value of all the payments to be made during the entire term of the annuity