The periodic payment on an annuity is calculated using the annuity payment formula. An annuity is a series of payments that are made on a regular basis and are received at a later date. The initial payout is the present value element of the formula; an example is the initial payout on an amortized loan.
The payment formula for conventional annuities is shown. This formula assumes that the interest rate remains constant, that the payments remain constant, and that the first payment is one period away. The rising annuity payment formula is used for an annuity that grows at a proportionate rate. An annuity that adjusts its payment and/or rate would have to be modified for each change if it didn't. The annuity due payment formula is used when the first payment is due at the commencement of the annuity, whereas the deferred annuity payment formula is used when the payment is due later.
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PERIODIC PAYMENT FORMULA OF ANNUITY
Answer:
The periodic payment on an annuity is calculated using the annuity payment formula. An annuity is a series of payments that are made on a regular basis and are received at a later date. The initial payout is the present value element of the formula; an example is the initial payout on an amortized loan.
The payment formula for conventional annuities is shown. This formula assumes that the interest rate remains constant, that the payments remain constant, and that the first payment is one period away. The rising annuity payment formula is used for an annuity that grows at a proportionate rate. An annuity that adjusts its payment and/or rate would have to be modified for each change if it didn't. The annuity due payment formula is used when the first payment is due at the commencement of the annuity, whereas the deferred annuity payment formula is used when the payment is due later.
The annuity is a payment that is made every year.
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Answer:
Regular Annuity Formulas
To solve for Formula
Periodic Payment when PV is known Pmt=PVA[1−1(1+i)Ni]
Periodic Payment when FV is known Pmt=FVA[(1+i)N−1i]
Number of Periods when PV is known N=−ln(1−PVAPmti)ln(1+i)
Number of Periods when FV is known
when FV is known N=ln(1+FVAPmti)ln(1+i)
Step-by-step explanation:
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