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Discuss how a single value is different from an annuity. How might present value and future...

Discuss how a single value is different from an annuity. How might present value and future value calculations differ for single values and annuities? Please answer in your own words. Do not use the outside resources.

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Answer:

Single values calculate the present value or future value of a sum of money while annuity is a series of payment at equal intervals. The intervals can be monthly, quarterly, half yearly and annually. Annuity is the frequency of payment.

Examples of Annuity = Regular deposits in saving bank account, Monthly insurance payment, etc.

Simple and single Present value formula:

PV = FV / (1+r)n

Present value of Annuity formula:

PV of annuity = P [1-(1+r)-n / r]

Where FV is future value, r is rate of interest or discount rate and n is number of years or periods.

Simple and single Future value formula:

FV = PV * (1+r)n

Future value of Annuity formula:

FV of Annuity = P [(1+r)n - 1 / r]

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