What is an annuity in financial mathematics?

An annuity is a regular, equal periodic sum of money. So in business it is necessary to work out the value of an annuity.

The annuity can be paid at the end of the period or at the beginning of the period (annuity due). So it is important to distinguish this the type of annuity as the formula and calculations will differ.

This diagram shows an annuity of $200 over 360 months or 30 years.

Now learn more about how to calculate the value of an annuity with these free resources.

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