Identification and Correction of a Common Fundamental Error in General Annuity Calculations
We examine the conventional method of solving general annuity problems whereby a general annuity is converted into a simple annuity by imputing either an equivalent interest rate per the annuitys payment period or an equivalent payment per its conversion period. Both methods err when the frequency of payments exceeds the frequency of interest compounding. We demonstrate, possibly for the first time, a correct method for solving general annuity problems in such circumstances. We compare the results of each method and recommend that flawed elements of current solution techniques be replaced by the method demonstrated in this paper.
general annuities equivalent payment interest accrued interest conversion period
WANG Xiaoyan Chris Deeley
Tianjin University of Commerce, Tianjin, P.R.China, 300134 School of Accounting, Charles Sturt University
国际会议
天津
英文
236-241
2009-12-12（万方平台首次上网日期，不代表论文的发表时间）