Annuities
Annuities are essentially a series of fixed payments required from you or paid to you at a specified frequency over the course of a fixed time period. The most common payment frequencies are yearly, semi-annually (twice a year), quarterly and monthly. There are two basic types of annuities: ordinary annuities and annuities due.
Ordinary Annuity: Payments are required at the end of each period. For example, straight bonds usually pay coupon payments at the end of every six months until the bond's maturity date.
Annuity Due: Payments are required at the beginning of each period. Rent is an example of annuity due. You are usually required to pay rent when you first move in at the beginning of the month, and then on the first of each month thereafter.

Number of periods: Monthly = 12 Quarterly = 4 Semi-annually = 2 Yearly = 1

Example
Suppose that an investor wants to accumulate $1,000 in five years and that the interest rate is 5%. How much does he/she need to set aside annually in order to accumulate $1,000 at the end of five years?

FVA = $3306.59

Question 1. A company expects a series of 24 monthly receipts of $3,600 each. The first payment will be received 1 month from today. Determine the present value of this series assuming an interest rate of 12% per year compounded semi-annually. ($45,180)

2. A company has made an investment in government bonds. The bonds will generate an interest income of $25,000 each year for 5 years. The interest rate is 10% compounded annually. Compute present value of the stream of interest income for 5 years. ($94,775)