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MyAssignmentHelpAU September 24, 2018
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The time value of money concept is applied or acknowledged or utilized a number of times and the real-life scenarios or problems. It is actually taken into consideration to find the present or the future value of the respective amount. When it comes to lump sum or annuity problem there is a big difference between them. The difference between them is because of and waiting as it is distributed payouts for a long stretch of a time period and when it comes to lump sum payment was the respective recipient needs to be paid the full amount at one go.
When it comes to problem the annuity holder will receive a fixed ocean of amount on regular time period whereas when it comes to lump sum approach the respectively fixed amount is given only ones to the respective recipient with which the contract comes to an end. The main difference between the two pairs is the frequency at which the payment has been made to the respective recipient through lump sum and annuity problem. The payment strategy of paying the receiver at one go is taken into consideration when it is about the lump sum approach. But when it is about annuity problem the strategy of being at an installment is taken into consideration with which the receiver will be receiving a fixed amount on regular basis.
So basically an annuity is defined as an agreement between the company and the respective individual with which the recipient will be getting regular payments at fixed intervals of time. It’s a great way to save money which can be used during the time of retirement.
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