An annuity is a contract between you and a financial institution. First, you make an investment, a lumpsum payment, or a series of payments. In return, the financial institution pays you regular disbursements (payments), beginning immediately or at some point in the future. For example, a pension fund will pay you an annuity when you retire based on the contributions you made during your working life. Two annuities have the same compounding and payment periods over the same number of terms. They also start with the same present value, but Annuity A has a regular payment of $1,500 per term while Annuity B has a regular payment of $2,500 per term. How do their per-term interest rates rA and rB compare? rArB rA=rB An annuity is a contract between you and a financial institution. First, you make an investment, a lumpsum payment, or a series of payments. In return, the financial institution pays you regular disbursements (payments), beginning immediately or at some point in the future. For example, a pension fund will pay you an annuity when you retire based on the contributions you made during your working life. Two annuities have the same compounding and payment periods over the same number of terms. They also start with the same present value, but Annuity A has a regular payment of $1,500 per term while Annuity B has a regular payment of $2,500 per term. How do their per-term interest rates rA and rB compare? rArB rA=rB