Annuity Factor
Barron's Business Dictionary:
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Annuity Factor
Mathematical figure showing the present value of an income stream that generates one dollar of income each period for a specified number of periods.
| Annuity, Annuitize, Annuitant | |
| Annuity in Advance, Answer, Anticipated Holding Period |
Barron's Real Estate Dictionary:
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Annuity Factor
A mathematical figure that shows the present value of an income stream that generates one dollar of income each period for a specified number of periods.
Example: Collins is to receive $1,000 each year for 10 years for rental of her land. To value this income, she used an annuity factor at a 10% rate that is 6.144. The estimated rent has a present value of $6,144 (6.144 ¥ $1,000).
1 1 – –—— (1 + i) Annuity factor = –––––––––– i where i is the periodic interest rate in decimal form and n is the number of periods that the income stream will last.
Example: Collins is to receive $1,000 each year for 10 years for rental of her land. To value this income, she used an annuity factor at a 10% rate that is 6.144. The estimated rent has a present value of $6,144 (6.144 ¥ $1,000).
1 1 – –—— (1 + i) Annuity factor = –––––––––– i where i is the periodic interest rate in decimal form and n is the number of periods that the income stream will last.
| Annuity, Annualdebt Service | |
| Annuity In Advance, Anticipation, Principle Of |
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Barron's Business Dictionary
Dictionary of Business Terms. Copyright © 2007 by Barron's Educational Series, Inc. All rights reserved.
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