Difference between revisions of "Annuity"

Revision as of 18:38, 27 August 2020

Annuity

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-An ''Annuity'' is financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. The [[Present Value|Present Value]] of an annuity is:
+Annuity
-<math>\text{PV (Annuity)}</math> <math>=</math> <math>\frac{1}{r} - \frac{1}{r(1+r)^t}</math>
-In  [[Principles of Corporate Finance|Principles of Corporate Finance]] an annuity is defined as a an investment that produces a level stream of cash flows for a defined number of periods.
-The future value of an annuity of a level of cash streams of \$1 is:
-<math>\text{PV (Future Annuity)}</math> <math>=</math> <math>\frac{(1+r)^t-1}{r}</math>
-Source: http://www.investopedia.com/terms/a/annuity.asp
 [[Category:finance]]