The Different Types of Annuities in a CompanyThe Different Types of Annuities in a Company

The Different Types of Annuities in a Company

Annuities

The initial design and style of annuities was centered on providing a guaranteed steady cashflow for a company or an individual a year or two after an investment is manufactured with a target of reducing longevity dangers. Annuities refer to financial loans sold by institutions dealing with finances such as for example banks with a main aim of accepting and growing money from interested functions (Besley & Brigham, 2013). In annuities, after changing the invested sum right into a sequence of time-based income repayments, the trader leaps out rewards at a later period. Annuities can often be of preset or of variable types depending on the methodology utilized to structure parameters such as for example duration of payment. In regards to fixed annuities, they give regular payments to the trader in several periods (usually after each one year). Alternatively, variable annuities rely upon the achievements of the venture, and in the event, it performs within an exemplary manner, the trader receives income flows after a protracted period of time (Besley & Brigham, 2013).

Annuities

are calculated through the procedure of annuitization, that involves

converting the original cost of expenditure to a sequence of periodic

repayments. AnnuitiesРІР‚в„ў are calculated applying the formulae below

(Besley & Brigham, 2013).

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