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Logannnnn Logannnnn
wrote...
A year ago
 Determine whether the following are an Ordinary Simple Annuity or an Ordinary General Annuity (HINT: or
neither) (2 marks each):
a) $36,225 earning interest at a rate of 4% p.a. compounded monthly.
b) Regular payments made at the end of each week for 75 weeks that earn interest of 1.8% compounded weekly.
c) 7 yearly deposits made on Dec 31 each year at 7% compounded annually.
d) Monthly investments made on the first day of the month carrying an interest of 9% compounded semi-annually.
e) Payments made at the end of every bi-weekly period that have an interest rate of 9% compounded monthly.

Please help solve
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Anonymous
wrote...
A year ago
Remember the following points:

  • An ordinary annuity is the annuity where regular deposit of amount is made at the end of the period.
  • In a simple ordinary annuity payment interval is same as interest period.
  • In a general ordinary annuity payment interval is different from the interest period.

[a] Here regular payment is not made, hence its not an annuity, hence answer is
[NEITHER]

[ b] Here periodic payment is made at the end of the week and interest period and payment period both are weekly, hence its a
[SIMPLE ORDINARY ANNUITY]

[c] Here yearly deposit is made at the end of the year and compounding period is also annually hence its a
[SIMPLE ORDINARY ANNUITY]

[d] Since payment is made at the starting of the month, hence its not an ordinary annuity, its an annuity due, hence correct answer is
[NEITHER]

[e] Here periodic payment is made at the end of the bi-week but compounding period is monthly, hence its
[GENERAL ORDINARY ANNUITY]
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