A series of equal instalment payments occurring at regular
intervals. For instance, annual payments are once a year, semi-annual
payments are made twice a year and quarterly payments are 4 times a year.
In the world of annuities however, this changes slightly as an annuity
is income from a capital investment that is paid in a series
of regular payments e.g. quarterly, semi-annual or annual payments. An
example of annuity is a loan repayment plan that calls for the borrower
to repay the loan by making a series of equal payments over some length
of time. Examples of such payments include car payments, student loan
payments or mortgage payments. A series of constant or equal cash flows
that occur at the end of each period for some fixed number of periods
is called an ordinary annuity.
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