Simple Annuities

Zrinka Lukač ()
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Zrinka Lukač: University of Zagreb, Faculty of Economics & Business

Chapter 26 in Economic Analysis Through Mathematics, 2026, pp 587-603 from Springer

Abstract: Abstract In this chapter, we consider annuities. An annuity is a sequence of payments, usually equal, made at equal intervals of time. An example of an annuity is a home mortgage which is paid monthly. The focus of this chapter is on simple annuities. A simple annuity is an annuity for which the payment interval and interest conversion period coincide, that is, the interest is compounded at the same frequency as the payments are made. An accumulated value or a future value of an annuity is the equivalent dated value of all payments due, at the end of the term. A discounted value or a present value of an annuity is the equivalent dated value of all payments due, at the beginning of the term. We derive the formulas for accumulated and discounted value of both ordinary annuity and annuity due, where ordinary annuity is an annuity for which periodic payments are made at the ends of payment intervals, while annuity due is an annuity for which periodic payments are made at the beginning of payment intervals.

Keywords: Payment interval; Term of an annuity; Periodic payment; Annuity certain; Contingent annuity; Perpetuity; Ordinary annuity; Annuity due; Deferred annuity; Simple annuity; General annuity; Accumulated value of an annuity; Discounted value of an annuity; Accumulation factor for n payments at an interest rate i; Discounting factor for n payments at an interest rate i (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1007/978-3-032-08812-3_26

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