ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Annuity is defined as a certain sum of money paid in equal intervals. That means that a company would be paying you a certain amount of money that you will receive either lump-sum or over a regular period of time.

Detailed explanation-2: -An annuity is a series of equal cash flows, or payments, made at regular intervals (e.g., monthly or annually). The payments must be equal, and the interval between payments must be regular.

Detailed explanation-3: -The amount of time between each continuous and equal annuity payment is known as the payment interval. Hence, a monthly payment interval means payments have one month between them, whereas a semi-annual payment interval means payments have six months between them.

Detailed explanation-4: -The calculation of an annuity follows a formula: Future Value of an Annuity =C (((1+i)^n-1)/i), where C is the regular payment, i is the annual interest rate or discount rate in decimal, and n is the number of years or periods.

Detailed explanation-5: -Immediate annuities: The lifetime guaranteed option. Deferred annuities: The tax-deferred option. Fixed annuities: The lower-risk option. Variable annuities: The potentially highest upside option. 16-Nov-2022