Definition§
Per Annum (Latin: “each year” or “annually”) refers to events, payments, or rates occurring yearly. This term is frequently used in finance, accounting, and business to describe various financial elements.
Examples§
- Interest Rates: An interest rate of 5% per annum means that the interest will be calculated and applied each year at a rate of 5%.
- Salary: An employee’s compensation might be stated as $60,000 per annum, indicating their annual pay.
- Depreciation: A machine that depreciates at $2,000 per annum is losing $2,000 in value each year.
- Financial Reports: Company’s annual reports provide financial performance per annum.
Frequently Asked Questions (FAQs)§
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What does per annum mean in finance?
- Per annum in finance typically refers to interest rates, meaning the percentage of interest earned or paid each year.
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Is per annum the same as annually?
- Yes, per annum and annually both mean once every year.
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How do you calculate per annum rates?
- To calculate per annum rates, divide the annual interest rate by the number of compounding periods within a year.
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Can per annum be used for non-financial terms?
- Yes, per annum can refer to any occurrence or event happening yearly, such as population growth rates or annual revenues.
Related Terms§
- Interest Rate: The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
- Annual Percentage Rate (APR): A measure of the cost of borrowing, expressed as a yearly interest rate inclusive of fees and other costs.
- Annual Return: The change in value of an investment over a one-year period, expressed as a percentage.
- Fiscal Year: A one-year period that companies and governments use for financial reporting and budgeting.
Online References§
- Investopedia - What Is Per Annum in Finance?
- Wikipedia - Annual Percentage Rate
- The Balance - Understanding Per Annum
Suggested Books for Further Studies§
- “Fundamentals of Financial Management” by Eugene F. Brigham and Joel F. Houston: This book provides in-depth insights into financial principles, including the concept of per annum rates.
- “Interest Rate Markets: A Practical Approach to Fixed Income” by Siddhartha Jha: Offers comprehensive coverage of interest rates and how they are analyzed and applied annually.
- “Accounting: Tools for Business Decision Making” by Paul D. Kimmel, Jerry J. Weygandt, and Donald E. Kieso: Covers core accounting concepts, including annual financial metrics.
- “Finance and Investment Handbook” by John Downes and Jordan Elliot Goodman: An extensive guide covering various financial terms and concepts including per annum rates.
Fundamentals of Per Annum: Finance Basics Quiz§
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