lifecontingencies (version 1.3.1)

annuity: Annuity function

Description

Function to calculate present value of annuities-certain.

Usage

annuity(i, n,m=0, k=1,type = "immediate")

Arguments

i

Effective interest rate expressed in decimal form. E.g. 0.03 means 3%. It can be a vector of interest rates of the same length of periods.

n

Periods for payments. If n = infinity then annuity returns the value of a perpetuity (either immediate or due).

m

Deferring period, whose default value is zero.

k

Yearly payments frequency. A payment of \(k^-1\) is supposed to be performed at the end of each year.

type

A string, either "immediate" or "due".

Value

A string, either "immediate" or "due".

Details

This function calculates the present value of a stream of fixed payments separated by equal interval of time. Annuity immediate has the fist payment at time t=0, while an annuity due has the first payment at time t=1.

References

Broverman, S.A., Mathematics of Investment and Credit (Fourth Edition), 2008, ACTEX Publications.

See Also

accumulatedValue

Examples

# NOT RUN {
# The present value of 5 payments of 1000 at one year interval that begins 
# now when the interest rate is 2.5% is
1000*annuity(i=0.05, n=5, type = "due")
#A man borrows a loan of 20,000 to purchase a car at
# a nominal annual rate of interest of 0.06. He will pay back the loan through monthly
#installments over 5 years, with the first installment to be made one month
#after the release of the loan. What is the monthly installment he needs to pay?
R=20000/annuity(i=0.06/12, n=5*12)
# }