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Foundations Of Financial Management
Found in: Page 279
Foundations Of Financial Management

Foundations Of Financial Management

Book edition 16th
Author(s) Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Pages 768 pages
ISBN 9781259277160

Short Answer

What is a deferred annuity?

Deferred annuity refers to a financial arrangement under which an annuity payment or receipt is committed after a certain time in the future.

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Step by Step Solution

Step 1: Meaning of annuity

Annuity refers to a stream of payment that is paid or received over uniform time intervals for a particular period of time.

Step 2: Reason for choosing daily compounding

Deferred annuity involves an annuity payment or receipt after a particular point of time in the future. For instance, a monthly annuity of $1,000 at 7% rate of interest for 5 years which is to be paid after 2 years is an example of a deferred annuity.

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