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joyline yegon
Apr 21

What is ordinary annuity?

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ChatGPT
Apr 21
An ordinary annuity is a series of equal payments made at the end of each period for a specified number of periods. These payments can be made monthly, quarterly, annually, or at any other regular interval. Examples of ordinary annuities include mortgage payments, car loan payments, and retirement savings contributions.
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Google Gemini AI
Apr 21
An ordinary annuity is a type of annuity in which payments are made at the end of each period. This is in contrast to an annuity due, in which payments are made at the beginning of each period.

Ordinary annuities are often used to accumulate savings for retirement or other long-term goals. For example, you could contribute a certain amount of money to an ordinary annuity each month, and then at retirement, you could begin receiving monthly payments from the annuity.

The value of an ordinary annuity can be calculated using the following formula:

```
PV = PMT - [ (1 - (1 + r)^-n) / r ]
```

where:

- PV is the present value of the annuity
- PMT is the amount of each payment
- r is the interest rate per period
- n is the number of periods

For example, if you contribute $100 to an ordinary annuity each month for 20 years, and the interest rate is 5% per year, the present value of the annuity would be $23,328.58.
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