EFB210 Lecture Notes - Lecture 3: Interest, Cash Flow, Annuity

• School: QUT
• Department: Economics and Finance
• Course: EFB210
• Professor: All

Document Summary

Annuities: pv: example 9: calculate the present value of a four-year ordinary annuity with annual payments of ,000 using a 8% discount rate. Annuities: an annuity is a series of fixed payments, c, at equal intervals of time, e. g. home loans repayments, leases, pensions. If payments are made at the end of the first period we have an ordinary annuity - payment in arrears. e. g. home loan repayments. If payments are made at the beginning of the period we have an annuity due - payment in advance. e. g. lease payments. If payments are made after the end of the first period we have an deferred annuity - payment in arrears. e. g. retirement deferred annuities. Annuities: c: can easily be rearranged to solve for c for amortising loans, e. g. home loan, example 10: you buy a ,000,000 property using ,000 of your own funds and.