MBF 100/101: Identifying Annuities

Which key words show if an annuity is Simple or General?

• If payments are made at the beginning of the period it is simple, if payments are at the end it is General

• If payments per year (pp) are equal to compounding per year (cp) it is Simple, otherwise it is General.

  (Ie, cp=pp is Simple, cp =/= pp is General.

• If Payments are being made it is Simple, if there are no payments being made it is General.

• There's no way of knowing, math is a mystery.

How do we know we are looking at an Annuity question?

• You are making regular payments

• Interest is compounded

• i₂=i

• A number has been changed by a certain %

Tags

CCSS.HSF-LE.A.1C

What key words tell us if an annuity is Ordinary or Due?

• If payments are made at the end of a period it is Ordinary, if they are at the beginning it is annuity Due.

• If payments per year (pp) are equal to compounding per year (cp) it is Ordinary, if they are not equal it is Due.

  (ie, cp=pp is Ordinary, cp=/=pp is Due).

• If you are making regular payments it is Ordinary, if there are not payments it is Due

• Flip a coin and hope for the best

If you invest $100 at the end of every quarter, what kind of annuity are you looking at?

• General

• Simple

• Ordinary

• Due

If a pension plan pays you $30,000 at the beginning of every year, what kind of annuity is it?

• Simple

• General

• Ordinary

• Due

If you invest every month at a rate 1.4% every month, what kind of annuity is it?

• Simple

• General

• Ordinary

• Due

If you win the lottery and receive $50,000 every month at a rate of 0.2% compounded every year, what kind of annuity is it?

• Simple

• General

• Ordinary

• Due

You invest $300 into your bank every month for 3 years. It grows at a rate of 2% compounded every month. What kind of annuity is this?

• Simple Ordinary Annuity

• Simple Annuity Due

• General Ordinary Annuity

• General Annuity Due

If you receive $1500 interest revenue at the end of every quarter and interest is 6% compounded every quarter, what kind of annuity is it?

• Simple Ordinary Annuity

• Simple Annuity Due

• General Ordinary Annuity

• General Annuity Due