Annuities-Mony annuity

Time value of time annuities-Mony annuity

Time value of time  annuity is a cycle of even cash flows that occur over equal period of time for a specific amount of time . examples of annuities include rent, college loan payments, lottery winings,insurance premiums, and rent received from tenants. An annuity might also occur over a lifetime, such as a pension payment.

structured settlement annuities Annuities come in three basic forms: an ordinary annuity, an annuity due, and a perpetuity. An ordinary annuity is a series of even cash flows due at the end of equal periods of time for a specific amount of time .examples of ordinary annuities include mortgage payments ,car loan payments, and college loan payments

To better understand ordinary annuities, Sell annuity payments each payment is made at the end of each period. time zero dose not have a payment because it represents the beginning of period one and dose not represent the end of a period . interest is compounded after each payment is made.

When calculating the time value of money for annuities, you can follow the same equation as single cash flows, but you must calculate each payment individually. The equation for calculating the time value of money illustrates this concept.

In this equation, PMT  represents the payment total for each period stands for the period number represents the current time period, and I stands for the interest rate. To calculate the future value, you need to calculate each entity payment's future value, then sum the rsultes.this answer will give you the future value if an ordinary annuity.