A simple annuity is an annuity where the payment interval is the same as the interest period. Examples of annuities include regular savings deposits and monthly mortgage or insurance payments. Annuities can also be classified as ordinary or due depending on whether payments are made at the end or beginning of each period, and as certain or contingent depending on whether payments are made over a definite or indefinite time period. Grade 11 will focus on ordinary annuities where payments are made at the end of each period and annuities certain where payments are made over a definite time period.

1. Simple Annuity

2. ANNUITY – a sequence of payments
made at equal (fixed) intervals or
periods of time.
Examples of annuities are regular
deposits to a savings account,
monthly home mortgage payments,
monthly insurance payments and
pension payments.

3. Annuities may be classified in different ways, as
follows
Annuities
According to payment
interval and interest period
Simple annuity – an annuity
where the payment interval
is the same as the interest
period
General Annuity – an
annuity where the payment
interval is not the same as
the interest period
According to time of
payment
Ordinary Annuity (or
Annuity Immediate) – a
type of annuity in which the
payments are made at the
end of each payment interval
Annuity Due – a type of
annuity in which the
payments are made at
beginning of each payment
interval
According to duration Annuity Certain – an
annuity in which payments
begin and end at definite
times
Contingent Annuity – an
annuity in which the
payments extend over an
indefinite length of time

4. Grade 11 will focus on Ordinary Annuities (not annuity Due), and
on Annuity Certain (not contingent Annuities).
Term of an annuity, t – time between the first payment interval
and the last payment interval
Regular or Periodic payment, R – the amount of each payment
Amount (future Value) of an Annuity, F – sum of future values of
all the payments to be made during the entire term of the annuity
Present Value of an annuity, P – sum of present values of all the
payment made during the entire term of the annuity.
Note