Lecture 17 I Annuity I Business finance I Syeda Arooj Naz

Business finance by Syeda Arooj Naz Annuity Types of Annuity Ordinary annuity Annuity Due Future value ordinary annuity Future value annuity due Present value ordinary annuity Present value annuity due An Annuity represents a series of equal payments (or receipts) occurring over a specified number of equidistant periods. Ordinary Annuity: Payments or receipts occur at the end of each period. Annuity Due: Payments or receipts occur at the beginning of each period. Student Loan Payments Car Loan Payments Insurance Premiums Mortgage Payments Retirement Savings The future value of an ordinary annuity can be viewed as occurring at the end of the last cash flow period, whereas the future value of an annuity due can be viewed as occurring at the beginning of the last cash flow period. The present value of an ordinary annuity can be viewed as occurring at the beginning of the first cash flow period, whereas the present value of an annuity due can be viewed as occurring at the end of the first cash flow period.