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mechanics and compounding

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12y ago

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When does interest begins compounding in an ordinary annuity?

At the end of the second period


When there is only one compounding period in a ordinary annuity the table factor for future value is always 1?

True


What is a deferred annuity?

An annuity that will not begin until some time period in the future.A deferred annuity is an annuity in which the taxes due on any taxable portion is deferred until you start to withdraw from the annuity. It is a way of compounding interest on the money you would normally paid taxes on if not in a ta deferred annuity. In a way it is like using the government's money to make you money.


What is the interest rate of the annuity formula and how is it calculated?

The interest rate in the annuity formula represents the rate at which your money grows over time. It is calculated by dividing the annual payment by the present value of the annuity, and then adjusting for the number of compounding periods per year.


Does annual compounding pay more money than daily compounding?

It all depends with the amount of the annual or daily compounding. In most cases it is however the daily compounding that pays more than the annual compounding.


Do you pay taxes on income earned in an annuity?

If the annuity is a non qualified tax deferred annuity (an annuity that taxes were paid on the money before they were placed into the annuity) you will pay taxes on any interest growth when it is removed from the annuity. If the annuity is a qualified annuity (no taxes were paid prior to placing the fund into the annuity) you will pay taxes on all withdrawals from the annuity.


What is the primary difference between an annuity and a compound annuity?

difference between an annuity and a compound annuity?Read more: What_is_the_primary_difference_between_an_annuity_and_a_compound_annuity


What gains more interest an ordinary annuity or an annuity due?

ordinary annuity


What is monthly annuity?

The option to get annuity every month is called monthly annuity.


What The difference between ordinary annuity and annuity due?

ordinary annuity we paid at the end of the period annuity due we paid at the begging of the period


What The differences between ordinary annuity and annuity due?

ordinary annuity we paid at the end of the period annuity due we paid at the begging of the period


Can you lose money with an annuity?

Yes, it is possible to lose money with an annuity if the investments within the annuity perform poorly or if there are high fees associated with the annuity.