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For January 2017 in this example, this is equivalent to calculating the present value of an ordinary annuity with 35 remaining payments.
A An ordinary annuity is like that old advert, "it does exactly what it says on the tin".
Example: Calculate the value at the end of four years of a series of $500 annual deposits made at the end of each year to an account paying 7% interest, compounded annually (an ordinary annuity is a series of equal payments made at the end of each period).
Go to Appendix F, Future Value of an Ordinary Annuity Table.
By factoring out Pmt / r and rearranging terms, one can derive the more commonly used present value formula for an ordinary annuity:
Thus, we can then compute the probability that an individual will have a higher income from a GSA plan than from an ordinary annuity. Insurance companies typically assess premium loading to cover for risk and profits that reduces the benefit payout to the individual.
UNIT LINKED PLAN, TERM ASSURANCE or ORDINARY ANNUITY: These products are not affected.
Once the annual PASS payment is determined, the transferor's income taxation of the payment is divided into three components: capital gain, non-taxable recovery of stock basis and ordinary annuity income.
ANNUITY BENEFITS PAID IN 2005 totaled about $50 billion in 2005, with ordinary annuity benefits paid contributing a little less than half of that total, according to annual statement filings.