Annuities Flashcards by Mothiver Chat

Q

Define

Annuity

A

An investment that involves the regular contribution of money (e.g. superannuation and reducing balance loans)

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Q

Formula

Investment recurrence relation

A

V(n+1) = V(n)(1+r) + D

new value of investment = current value x (1+rate per period) + payment

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Q

Formula

Loan recurrence relation

A

V(n+1) = V(n)(1+r) - D

new value of loan = current value x (1+rate per period) - payment

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