A serial payment of fixed amount for a particular period of time is referred to as annuities. This payment, however, might be required from you or may be receivable by you from certain relevant sources. Paying an installment on a regular basis when you take a loan or borrow some amount of money from an institution might disturb your financially stable life. Thus, calculating the annuity amount prior to paying the money would help you manage your finances accordingly. The most common payment frequencies that are followed include yearly, semi-annually, quarterly and monthly.
Types of Annuities
There exist two types of primary annuities – ordinary annuity and annuity due.
Ordinary Annuity: In this case, the payments are required to be made at the end of each period. Coupon payments made by the straight bonds at the end of every six months after it gets matured is an ideal example of this type of annuity.
Annuity Due: The payments need to be made at the beginning of each period. Rent can be a good example over here, which is paid as soon as you start using one's property.
To calculate ordinary as well as annuity due amounts to be paid, you can use the formula that have been provided for quick computation without engagement of much of your time. Managing your finances to ensure financial stability to your life is really very important and hence calculating the amounts beforehand would be a great alternative for balancing your monetary needs. In order to calculate the annuities, you must try to figure out some of the significant things, such as, the annuity amount, interest rate, number of payments you need to make after each period. Knowing these information would surely be a great help in making the calculations, either it is the present or future value of an ordinary annuity or annuity due.
Types of AnnuitiesThere exist two types of primary annuities – ordinary annuity and annuity due.
Ordinary Annuity: In this case, the payments are required to be made at the end of each period. Coupon payments made by the straight bonds at the end of every six months after it gets matured is an ideal example of this type of annuity.
Annuity Due: The payments need to be made at the beginning of each period. Rent can be a good example over here, which is paid as soon as you start using one's property.
To calculate ordinary as well as annuity due amounts to be paid, you can use the formula that have been provided for quick computation without engagement of much of your time. Managing your finances to ensure financial stability to your life is really very important and hence calculating the amounts beforehand would be a great alternative for balancing your monetary needs. In order to calculate the annuities, you must try to figure out some of the significant things, such as, the annuity amount, interest rate, number of payments you need to make after each period. Knowing these information would surely be a great help in making the calculations, either it is the present or future value of an ordinary annuity or annuity due.
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