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Ordinary Annuity vs Annuity Due
Ordinary Annuity vs Annuity Due
Ordinary Annuity vs Annuity Due
Which one of the following features distinguishes an ordinary annuity from an annuity due? A. Number of equal payments B. Amount of each payment C. Frequency of payments D. Annuity interest rate E. ti [1]
Which one of the following features distinguishes an ordinary annuity from an annuity due? A….. Which one of the following features distinguishes an ordinary annuity from an annuity due?
We usually differentiate between ordinary annuities and annuities due.. Become a Study.com member to unlock this answer! Create your accountView this answer
Our experts can answer your tough homework and study questions.Ask a question Ask a question. Understand what an annuity is, examine the annuity formula and learn how to calculate its future value, and see examples of annuities.
Immediate Annuity Vs Deferred Annuity [2]
An annuity is like a contract between you and your insurance company. In an annuity plan, you invest a lump sum amount or pay regular premiums during your earning years and receive guaranteed# regular payouts once you retire
In an immediate annuity plan, you start receiving the regular income immediately after investing. You invest a lump sum amount and begin to receive the payout after 12 months from the start of your policy, depending on the frequency chosen
In a deferred annuity plan, the regular income or annuity starts after a certain date. This option may be more suitable if you still have a few years ahead of you for your retirement and do not need a retirement income immediately.
Annuities — Page Two [3]
Annuity: A series of equal payments or receipts occurring over a specified number of periods.. Ordinary annuity: A series of equal payments or receipts occurring over a specified number of periods with the payments or receipts occurring at the end of each period.
WARNING: While technically correct, the last two definitions shown above can be a bit confusing. Whether a cash flow appears to occur at the end or the beginning of a period often depends on your perspective
Therefore, the real key to distinguishing between an ordinary annuity and an annuity due is the point at which either a future or present value is to be calculated. Remembering the following characteristics should help you to identify the type of annuity that you are dealing with:
SOLVED: Which one of the following features distinguishes an ordinary annuity from an annuity due? Frequency of the payments. Annuity interest rate. Number of equal payments When the first payment occ [4]
Get 5 free video unlocks on our app with code GOMOBILE. Which one of the following features distinguishes an ordinary annuity from an annuity due?
With an annuity due, payments are made at the beginning of each period. Annuities due have lower interest rates than ordinary annuities_ Annuities due have higher interest rates than ordinary annuities
An annuity is a sum of money that is paid in regular equalpayments. The _____ of an annuity is the sum of all theindividual payments together with all the interest.
8.2 Annuities – Principles of Finance [5]
– Distinguish between an ordinary annuity and an annuity due.. – Calculate the present value of an ordinary annuity and an annuity due.
– Explain how annuities might be used in retirement planning.. An annuity is a stream of fixed periodic payments to be paid or received in the future
Before exploring present value, it’s helpful to analyze the behavior of a stream of payments over time. Assume that we commit to a program of investing $1,000 at the end of each year for five years, earning 7% compounded annually throughout
The Difference Between Ordinary Annuity and Annuity Due [6]
An annuity is a series of cash flows occurring over time. There are different types of annuities, but they all share the same concept: systematic future inflow followed by systematic future outflow
An ordinary (or straight line) annuity has equal payments that occur at regular intervals, with the first payment made immediately. An example would be $100 per month for 3 years beginning at age 21, where each payment is made at the end of the month
Each subsequent monthly payment continues to occur 1 month after the end of each previous month. An annuity due has unequal payments occurring at regular intervals, with the first payment occurring immediately
Chapter 5 Quiz Student: [7]
Course: Financial Markets and Institutions (FIN 4303). Do you want full access? Go Premium and unlock all 5 pages
Lee pays 1 percent per month interest on his credit card account. Which one of the following features distinguishes an ordinary annuity from an annuity due?
Webster Mining is considering the purchase of a new sorting machine. payment of $29,600 for seven years at 8 percent interest
Annuity Types: Annuity Due And Ordinary Annuity [8]
Annuity due table depicts the worth of the specified annuity mentioned by that table. However, the annuity due table is different for present and future value considering the time value and value of the investment.
Moreover, we need to get a brief of annuity and its kind first leading to annuity due table.. An annuity can be described as a kind of multi-period investment where a principal amount is deposited and then regular payments are made during the phase of investment
However, the individual makes an initial down payment and then each month a fixed amount. The sum of the payments made altogether will be greater than the loan amount, which explains an interest rate implicity charged on the loan
What Does Annuity Due Mean? [9]
“Annuity due” is a financial term that you may encounter when you are borrowing money, paying rent, saving for retirement or purchasing an annuity. Annuity due means that a payment is due at the beginning of the time period in question
Either term can apply to money you are paying, such as your bills. They can also apply to money that others pay to you, such as payments from a retirement annuity
A common instance in which you might encounter an annuity due is if you are leasing something. If you’re renting an apartment or leasing a car, the payment is generally due on the first of the month
Sources
- https://homework.study.com/explanation/which-one-of-the-following-features-distinguishes-an-ordinary-annuity-from-an-annuity-due-a-number-of-equal-payments-b-amount-of-each-payment-c-frequency-of-payments-d-annuity-interest-rate-e-timing-of-the-annuity-payments.html
- https://www.iciciprulife.com/retirement-pension-plans/immediate-annuity-vs-deferred-annuity.html#:~:text=In%20the%20case%20of%20an,period%20comes%20to%20an%20end.
- https://web.utk.edu/~jwachowi/annuity2.html
- https://www.numerade.com/ask/question/which-one-of-the-following-features-distinguishes-an-ordinary-annuity-from-an-annuity-due-frequency-of-the-payments-annuity-interest-rate-number-of-equal-payments-when-the-first-payment-occu-15047/
- https://openstax.org/books/principles-finance/pages/8-2-annuities
- https://www.financestrategists.com/insurance-broker/annuity/ordinary-annuity-vs-annuity-due/
- https://www.studocu.com/en-us/document/florida-international-university/financial-markets-and-institutions/chapter-5-quiz-answers/4847417
- https://www.thekeepitsimple.com/annuity-due-table/
- https://smartasset.com/retirement/what-is-annuity-due
