annuity in advance
Học thuậtThân thiện
Definition
Noun: An annuity in advance is a series of payments made at the beginning of each payment period (e.g., at the start of each month, quarter, or year), rather than at the end. This financial arrangement is common in leases, rentals, and certain insurance or investment contracts.
Usage
This term is used in finance, accounting, and legal contexts to describe a specific payment schedule. * The lease agreement specifies an annuity in advance, requiring rent to be paid on the first day of each month. * For the pension plan, he chose the annuity in advance option to receive his payment at the start of the period.
Advanced Usage
- Present Value Calculation: The present value of an annuity in advance is calculated differently from an ordinary annuity (paid at the end of the period) because each payment is received one period sooner, making it more valuable today.
- Contrast with 'Annuity in Arrears': An annuity in advance is the opposite of an annuity in arrears (or ordinary annuity), where payments are made at the end of each period.
Variants and Related Words
- Annuity Due: This is a direct synonym for annuity in advance.
- Ordinary Annuity / Annuity in Arrears: The contrasting term for payments made at the end of a period.
- Advance Payment: A general term for any payment made before it is formally due.
Synonyms
- Annuity due
- Prepaid annuity
Related Phrases
- Rent payable in advance: A common example of an annuity in advance structure.
- Payment at the beginning of the period: A descriptive phrase for the payment timing.
Noun
- an annuity paid in a series of more or less equal payments at the beginning of equally spaced periods
- rent payable in advance constitutes an annuity in advance for the landlord