The document defines an algorithm as a set of finite rules or instructions to solve a problem in a finite number of steps. It lists the key characteristics of an algorithm as being clear, having well-defined inputs and outputs, being finite, feasible, and language independent. The properties of an algorithm are that it must terminate, produce at least one output, take zero or more inputs, be deterministic, and have effective steps. The steps to design an algorithm are to define the problem, constraints, inputs, outputs, and solution. An example algorithm is given to add three numbers and print the sum.