Business Mathematics

9

Annuity

LEARNING OBJECTIVES

After studying this chapter, you will be able to understand:

• The meaning and different terminologies of annuity
• Different types of annuity
• Derivation of formulas for different annuities
• The concept of amortization
• The meaning and uses of sinking fund

INTRODUCTION

In our day-to-day life we observe lots of money transactions. In many transactions payment is made in single transaction or in equal installments over a certain period of time. The amounts of these installments are determined in such a way that they compensate for their waiting time. In other cases, in order to meet future planned expenses, a regular saving may be done, i.e., at regular time intervals a certain amount may be kept aside, on which the ...