Let Us Remember 1. Differentiate simple Annuity from general annuity. 2. What is meant by fair market value? 3. What is a deferred annuity? 4. What is period of deferral? 5. Give the formula of the following: a. Future Value of an Ordinary Annuity b. Present Value of an Ordinary Annuity c. Future Value of General Annuity d. Present Value of General Annuity
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Answer:
1.Both simple and general annuities have a time diagram for its cash below as shown below. The main difference is that in a simple annuity the payment interval is the same as the interest period while in a general annuity the payment interval is not the same as the interest period.
2.Fair market value (FMV) is the determined value of a home and what it'll sell for in an open market. Typically, a willing seller and willing buyer will agree on a property's FMV, using their reasonable knowledge of the property in the transaction.
3.A deferred annuity is an insurance contract that guarantees its owner retirement income at a future date. Owners of deferred annuities do not pay taxes until their annuity starts paying out. Interest accrued on an annuity is tax-deferred until the money is withdrawn.
4.The deferred period is the period of time from when a person has become unable to work until the time that the benefit begins to be paid. It is the period of time an employee has to be out of work due to illness or injury before any benefit will start accumulating, and any claim payment will be made.
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