# Annuity Definition and 53 Threads

An annuity is a series of payments made at equal intervals. Examples of annuities are regular deposits to a savings account, monthly home mortgage payments, monthly insurance payments and pension payments. Annuities can be classified by the frequency of payment dates. The payments (deposits) may be made weekly, monthly, quarterly, yearly, or at any other regular interval of time. Annuities may be calculated by mathematical functions known as "annuity functions".
An annuity which provides for payments for the remainder of a person's lifetime is a life annuity.

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1. ### B Sequence formula needed - Keyword --> annuity

Below is a screenshot of an insurance policy: I was told by the insurance company that the return becomes lower and lower with the age till death increasing. And this reduction in return is by an annuity ratio of 6%. I wanted to find out the formula so that I can understand the effect of...
2. ### Given price of an annuity and its level payments, find the interest rate

A 30-year monthly-payment mortgage loan for 300,000 is offered at a nominal rate of 0.072 converted monthly. Thus the monthly effective interest rate is 0.006 and the calculated monthly payment is 2036.36. (Calculate the payment (PMT) on your calculator and leave it there for the moment.) When...
4. ### MHB Applying the annuity method - how?

Hello, I was given following task: A food processing company has to make a decision whether or not to expand its production facilities. A feasibility study showed the following estimates: Initial cost outlay €800,000 Further outlay in 4 years €600,000 Residual value after 10 years €200,000...
5. ### MHB Create an Installment Plan for Mr. Budi's Annuity

Mr. Budi borrows 2,000,000IDR which will be amortized with 10 annuities. The first annuity will be paid in 1 year with 10% per year interest. Make the installment plan! For the annuity I got A = M\times\frac1{\sum_{n=1}^p(1+i)^{-n}} = 2,000,000\times\frac1{\sum_{n=1}^{10}(1+0,1)^{-n}} =...

9. ### MHB Present value of a perpetual annuity

Hey! :o I want to determine the present value of a perpetual annuity, which will incur an interest payment of € 1 at the end of each year. A calculative interest rate $r$ is assumed. We are at the time $t = 0$, the first payout is in $t = 1$. Could you explain to me what an interest...
10. ### MHB How to Calculate the Future Value of Geometric Annual Annuity?

The geometric annual annuity runs for a period of 45 years which starts now. • The first payment at the end of the first year from now amounts to R2 000. • The growth rate of the annual payments equals 7% per year during the first 30 years (of the period of 45 years). • The growth rate of the...
11. ### How do you calculate annuity payments with a 5% increment each year?

So, unless you've been living under a rock, you should know the jackpot for the powerball is at 1.5 billion dollars. I was looking up the distribution of annuity payments and the website said that the payments are not equally distributed. They are incremented by 5% each year. Like the nerd I...

30. ### Financial Assignment involving annuities

The Question is as follows; An individual age 30 is planning to start investing in a personal pension. Her aim is to have sufficient funds to provide a monthly pension of £1000 when she retires at the age of 65, payable for 30 years. She is able to make bi-annual contributions to the fund...
31. ### News What is the Asset Value of a College/University Degree?

I'll try to put some numbers to this later. There has been a lot of discussion about the current cost of education and about changes in wealth for each age group over time. If we considered education as asset which yields about 19.5 thousand per year for about 40 years we can put a dollar value...
32. ### Electricity Economics: Calculating Profitability

Hi, Here's my problem statement, followed by some calculations I consider and then from som questions I'll like to be answered. Homework Statement The household assumes that 60% of its consumption of electricity (both energy and power) is used for heating. Calculate the relative...
33. ### Math Modeling - Dynamical Systems -

***Ugh, I'm so sorry. I think I put this in the wrong thread. It probably should be in Calculus and Beyond... I tried to delete it but didn't see that option.So my professor gave us this problem to work on but no one could figure it out. I don't know where to even start and there's nothing at...
34. ### Weekly Annuity Calculation Method

Homework Statement Consider a new Loan as below: InterestRate = 56.558% annual in arrear Amount = 1.000.000 Principal Payment Period = weekly (7 Days) Term = 25 weeks Homework Equations How to calculate the weekly installment amount? How's this "weekly principal payment" term has affect to the...
35. ### Calculating Present Value of a Growing Annuity with Monthly Payments

[b]1. 5. A twenty year annuity has end of month payments. The first year the payments are each $100. In subsequent years each payment increases by$10 over what it was the previous year. Find the present value of the annuity if i = 4% is the effective annual interest rate. Thank you

38. ### How Does Timing Affect Annuity Calculations?

Find the final value of a plan in which payments of $800 are made every 6 months for 3 years, earning 10% interest compounded semi-annually. The first payment is made in 6 months. My Answer: R = 800, n = 6 , i = 5% A = R[(1-i)^n - 1] / i A = 800(1.05^6 - 1) / 0.05 A =$5441.53 So I...
39. ### Annuity Equation isolating n value HELP

Annuity Equation "isolating n value" HELP! R =\frac{Pi(1+i)^n}{(1+i)^n-1} 1. I need to solve for n. n = number of years P = Investment R = Yearly Savings i = interest rate 3. My Attempt: R =\frac{Pi(1+i)^n}{(1+i)^n-1}\rightarrow -1 \cdot R = \frac{Pi(1+i)^n}{(1+i)^n} \cdot...
40. ### TVM Problem solving the end amount.

[SOLVED] TVM Problem solving the end amount. Homework Statement 2. A spreadsheet software or TVM solver on a calculator can be used to determine the equal monthly payments that can be paid from an annuity for a set length of time. You can enter different payments until you find the one that...
41. ### Is the Solution to the Annuity Differential Equation Correct?

I'm trying to figure out the solution to a differential equation that describes the accrued interest on an annuity - rather than a lump sum at the beginning, we're dealing with multiple and regular deposits. The prof implied that we would have to solve for the dif eq'n S' = k + rS where k is...
42. ### Any good sites for learning math?

I starting in actuarial mathematics in September, so I would like to get ahead a bit and do some learning on my own. These are my obligatory courses: So if anyone knows a good place where I could get ahead and start learning any of these topics, please go ahead and post it.
43. ### Is Actuarial Mathematics a Challenging 400 Level Course?

The course is a 400 level course but when I look at the description of it, I'm thinking it should be easy. Am I wrong? Course description: Topics include the economics of insurance, individual risk models for a short term, survival distributions and life tables, life insurance per year, life...
44. ### Which Annuity Formula to Use for Birthday Deposits?

A father opened a savings account for his daughter on the day she was born, depositing $1000. Each year on her birthday he deposits another$1000, making the last deposit on her twenty-first birthday. If the account pays 9.5% interest compounded annually, how much is in the account at the end of...