Economics Time Value Of Money Questions
The concept of annuity payment frequency period refers to the frequency at which payments are made in an annuity. It determines how often the annuitant receives payments, such as monthly, quarterly, semi-annually, or annually.
The calculation of annuity payment frequency period involves determining the number of payment periods within a given time frame. This can be calculated by dividing the total number of years in the annuity by the frequency of payments per year.
For example, if an annuity is set to make monthly payments for a total of 10 years, the calculation would be as follows:
Number of payment periods = Total number of years x Frequency of payments per year
Number of payment periods = 10 years x 12 payments per year
Number of payment periods = 120 payment periods
In this case, the annuity payment frequency period would be monthly, with a total of 120 payment periods over the 10-year period.