ABSTRACT
The number of dollars in each separate payment of an annuity is called the rent of the annuity. In this chapter, the authors show that 3.7171 is the present worth of an annuity composed of payments of 1.00 each. They may reverse this and say that 1.00 is the rent of 3.7171 invested in an annuity of 4 payments at 3%. A borrower may agree to pay back a loan in instalments, which comprise principal and interest. Suppose a loan of $1,000 were made under the agreement that such a uniform sum should be paid annually as would pay off (amortise) the entire debt with 3% interest in 4 years. In the case exhibited in the schedule, the debt was amortised, with the assent of the creditor, by gradual payments.
