What is a good response to the information below ? opinion on it....<\/p>
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When it comes to an annuity, three primary characteristics make up an annuity. The first characteristic is that whether you are the payer or the receiver, the amount being paid or received is always the same periodically. In other words, you are either receiving or paying the same amount of money over and over again. For example, if the first payment you make is $1,000 then the next payment will be again $1,000 and the payment following that one will be $1,000. You will continue to pay that same amount continually. The second characteristic is that the interval in which the payment is being made or received is always the same. Going back to the example, if the $1,000 payment is due monthly, then every month the payment of $1,000 will occur. The last characteristic is that the compounding of interest is applied once each interval. So if the investment is being made every month then the interset is compounded monthly or if the investment is being made quarterly then the interest is compounded quarterly. There are two types of annuity, an ordinary annuity and an annuity due. The main difference between an ordinary annuity and an annuity due is when the payment occurs. An ordinary annuity occurs at the end of each period. This means that payment is not made or received until the end of an interval. On the other hand, an annuity due occurs at the beginning of each period. This means the payment or receipts starts immediately. A good way to visualize an annuity due is with rent. When you pay for your apartment's rent, the landlord expects to receive the money up front and not when the month ends. With an ordinary annuity, no rents are paid or received until the end of the period, while in an annuity due the rents are paid or received immediately. As a result, interests don't accumulate until after the first period in an ordinary annuity, while in an annuity due, the interest will accumulate during the first period<\/p>", "transcribed_text": "", "related_book": { "title": "Entrepreneurial Finance", "isbn": "1305968352, 978-1337635653, 978-1305968356", "edition": "6th edition", "authors": "J. Chris Leach, Ronald W. Melicher", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/1482.jpg", "uri": "\/textbooks\/entrepreneurial-finance-6th-edition-1482", "see_more_uri": "" }, "free_related_book": { "isbn": "0521655420", "uri": "\/textbooks\/practical-child-and-adolescent-psychopharmacology-1st-edition-978-0521655422-269347", "name": "Practical Child And Adolescent Psychopharmacology", "edition": "1st Edition" }, "question_posted": "2024-06-28 05:34:18", "see_more_questions_link": "\/study-help\/questions\/business-human-resource-management-2020-May-22", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/why-would-companies-include-vesting-criteria-in-their-401k-retirement", "description": "Why would companies include vesting criteria in their 401(k) retirement plans?", "stars": 3 }, { "url": "\/study-help\/coaching-supervision-a-practical-guide-for-supervisees\/do-you-think-that-burnout-engagement-and-boredom-are-contagious-1980277", "description": "Do you think that burnout, engagement and boredom are contagious, that is that they spread from one employee to another? 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