GENMATH

Annuity

A fixed sum of money paid to someone at regular intervals, subject to a fixed compound interest rate.

Term of an Annuity

The time between the first payment interval and the last payment interval.

Present Value

The current worth of an annuity, calculated by discounting future payments to the present time.

Periodic Payment

Series of equal payments made at regular intervals throughout the duration of an annuity.

Future Value

The amount that an annuity will accumulate to by the end of its term, including all periodic payments and interest.

Simple Annuity

An annuity where the interest conversion or compounding period coincides with the payment interval.

General Annuity

An annuity where the interest conversion or compounding period is different from the payment interval.

Ordinary Annuity

An annuity in which the payments are made at the end of each payment interval.

Annuity Certain

An annuity in which payments begin and end at definite times.

Contingent Annuity

An annuity whose payments extend over an indefinite length of time.

Annuity Due

A payment made at the beginning of each month for money borrowed.

Deferred Annuity

An annuity where payments are made at the end of each payment interval, but the first payment is postponed.

Insurance

An example of a contingent annuity.

Ordinary Annuity

An annuity represented by a deposit made at the end of every three months at a set interest rate.

Annuity Due vs Ordinary Annuity

Annuity Due payments are made at the beginning while Ordinary Annuity payments are made at the end of each interval.

Simple Annuity Example

Depositing P2000 every month for 2 years at 8% per year compounded monthly.

General Annuity Example

Depositing P5000 every month for 5 years at 8% compounded annually.

SIMPLE INTEREST

The interest charged on the principal alone for the entire length of an investment.

Principal

The amount you borrowed, deposited, or invested.

Interest

The amount paid or earned for the use of money.

Compound Interest

The interest on the principal and the interests earned for previous periods.

Time in Years

The length of time from the date a loan is made to the date it becomes due.

Formula for Simple Interest

I=PRT.

Rate

The percentage at which interest is computed on the principal per year.

Loan Date

The date on which money is received by the borrower.

Maturity Date

The due date for payment of the principal.

Nominal Rate

The annual interest rate that does not consider the compounding period.

Maturity Value Formula

All of these in relation to solving for the maturity value of simple interest.