What are annuities?

Annuity are amount that is the same and they occur over the same time interval. 

There are 5 types of annuity:

1. Ordinary annuities

An ordinary annuity is a series of constant cash flows that occur at the end of each period for some fixed number of periods commencing at the end of the first period ie t=1

Examples include consumer loans and home mortgages.

2. Annuities due

An annuity due is a series of constant cash flows that occur at the start of each period for some fixed number of periods.

Examples include paying rent in advance or uni fees in advance

3. Deferred annuities

A deferred annuity is a series of constant cash flows that occur at the end of each period for some fixed number of periods commencing some future period after period one.

4. Perpetuities

A perpetuity is a series of constant cash flows that occur at the end of each period indefinitely.

Examples include a scholarship fund available each year forever.

5.Growing perpetuities

An growing perpetuities is a series of growing cash flows that occur at the end of each period indefinitely commencing at the end of the first period ie t=1

Examples include ordinary dividend

Having issues with your finance module? SMS us at +65 9758-7925 or email: enquiry@starcresto.com