1.Define simple annuity and General Annuity. 2.Compare and contrast simple annuity and General Annuity.3.Give an Example of simpis annuity and General Annuity.#respect post​

1. Definitions:a. Simple Annuity:A simple annuity is a series of equal payments made at equal intervals over a fixed period, with interest applied only to the principal amount.b. General Annuity (or Compound Annuity):A general annuity is a series of equal payments made at equal intervals over a fixed period, with interest compounded on both the principal and any accrued interest.2. Comparison and Contrast:Similarities:Both involve regular paymentsBoth have a fixed termBoth earn interestDifferences:Interest calculation: Simple annuity (only principal) vs. General annuity (principal and accrued interest)Interest rate: Simple annuity (fixed rate) vs. General annuity (may vary)Payment amount: Simple annuity (fixed) vs. General annuity (may increase)3. Examples:a. Simple Annuity:Suppose you deposit ₱1,000 every year for 5 years, earning 5% interest per annum.Year 1: ₱1,000 (principal) + ₱50 (interest) = ₱1,050Year 2: ₱2,000 (principal) + ₱100 (interest) = ₱2,100Total: ₱5,500b. General Annuity:Suppose you deposit ₱1,000 every year for 5 years, earning 5% compound interest per annum.Year 1: ₱1,000 (principal) + ₱50 (interest) = ₱1,050Year 2: ₱2,050 (principal + interest) + ₱102.50 (interest) = ₱2,152.50Total: ₱5,816.45[tex].[/tex]

Answered by mjPcontiga | 2024-10-24