3.12 Terminology and Glossary of Symbols

Terminology

• Annuity: a series of payments, usually in equal amounts, made at periodic time intervals.
• Payment (PMT): the amount of the periodic payment
• Payment Interval (payment period): the time between the successive payments
• Future value (accumulated or maturity value) (FV): the accumulated value of the series payments at the end of the term.
• Nominal rate (I/Y): the yearly or annual rate of interest
• Present value (principal or discounted value) (PV): The discounted value of the series of payments at the beginning of the term.
• Term (t): in this module refers to the term of an annuity, which is the time period (in years) from the beginning of the first payment interval to the end of the last payment interval.

Glossary of the Symbols

• I/Y Nominal interest rate per year (%)
• C/Y: Frequency of interest compounding period per year
• i: Interest rate per compounding period (%)
• t: Term of annuity (in years)
• N: Total number of periodic payments in the annuity  term
• P/Y: Number of payments per year
• PMT: Amount of periodic payment ($)
• PV: Present value of an annuity ($)
• FV: Future (maturity) value of an annuity ($)
• I: Interest Amount ($)