Annuity And Perpetuity

Perpetuity is a type of annuity which continues forever.

Annuity and perpetuity. With a perpetuity the payments continue on the same schedule infinitely. An annuity is a repayment made periodically for a set period of time whereas a perpetuity is a periodic repayment that has no end. With that said the definition of perpetuity contracts is quite simple too.

A perpetuity on the other hand is a regular payment that is indefinite. Annuities and perpetuities are terms that are very important for any investor to know and understand since they both refer to types of financial payments made. An annuity is a financial instrument that pays consistent periodic payments.

Perpetuities are set payments received foreveror into perpetuity. Unlike perpetuities annuities eventually expire. It says that the present va lue of an annuity of C dollars per annum is C divided by r where r is the average interest rate per annum.

Equation 7 is very simple. A perpetuity immediate is an annuity immediate contin- uing indefinitely. In other words each period the growth is the same rate.

An annuity is not considered a perpetuity. There is only one difference between a traditional annuity and a perpetuity an annuity pays for a set number of years or for a lifetime while a perpetuity pays an income indefinitely. In an annuity the payment is made or received.

An annuity is an investment that makes regular payments throughout the year. Frequently Asked Questions about Annuities and Perpetuities Can an annuity be perpetual. Its present value one period before the first payment is denoted a.