Per Annum

Per Annum Annual Yearly Finance Interest Rates Accounting
Per annum, a Latin term meaning 'each year' or 'annually,' is used across various fields to denote the yearly occurrence or rate of an event.
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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

  1. 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%.
  2. Salary: An employee’s compensation might be stated as $60,000 per annum, indicating their annual pay.
  3. Depreciation: A machine that depreciates at $2,000 per annum is losing $2,000 in value each year.
  4. Financial Reports: Company’s annual reports provide financial performance per annum.

Frequently Asked Questions (FAQs)

  1. 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.

  2. Is per annum the same as annually?

    • Yes, per annum and annually both mean once every year.

  3. 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.

  4. 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.
  1. Interest Rate: The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
  2. Annual Percentage Rate (APR): A measure of the cost of borrowing, expressed as a yearly interest rate inclusive of fees and other costs.
  3. Annual Return: The change in value of an investment over a one-year period, expressed as a percentage.
  4. Fiscal Year: A one-year period that companies and governments use for financial reporting and budgeting.

Online References

  1. Investopedia - What Is Per Annum in Finance?
  2. Wikipedia - Annual Percentage Rate
  3. The Balance - Understanding Per Annum

Suggested Books for Further Studies

  1. “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.
  2. “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.
  3. “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.
  4. “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

### What does per annum mean in finance? - [ ] Monthly - [x] Annually - [ ] Weekly - [ ] Daily > **Explanation:** In finance, per annum means annually or once a year. ### If you have an interest rate of 5% per annum, how is the interest applied? - [x] Each year at 5% - [ ] Each month at 5% - [ ] Each day at 5% - [ ] Each quarter at 5% > **Explanation:** An interest rate of 5% per annum means interest is applied each year at a rate of 5%. ### John earns $100,000 per annum. What does this mean? - [ ] He earns $100,000 every month. - [ ] He earns $100,000 every week. - [ ] He earns $100,000 every two years. - [x] He earns $100,000 every year. > **Explanation:** If John earns $100,000 per annum, it means he earns $100,000 each year. ### Per annum can be used in which contexts? - [ ] Only in finance - [ ] Only in academic settings - [x] In various contexts like finance, salaries, and growth rates - [ ] Only in legal documents > **Explanation:** Per annum can be used in a variety of contexts, including finance, salaries, and growth rates. ### What other term is synonymous with per annum? - [ ] Biennially - [ ] Semi-annually - [x] Annually - [ ] Quarterly > **Explanation:** Annually is synonymous with per annum, both meaning once every year. ### How would you express a monthly interest rate on an annual basis? - [x] Multiply by 12 - [ ] Divide by 12 - [ ] Multiply by 365 - [ ] Divide by 365 > **Explanation:** To express a monthly interest rate on an annual basis, you would multiply it by 12. ### Which financial metric is NOT typically expressed per annum? - [x] Daily stock prices - [ ] Annual salary - [ ] Interest rates - [ ] Annual return > **Explanation:** Daily stock prices are expressed daily, not per annum. ### An investment yields a 10% annual return. How much would it yield per annum? - [x] 10% - [ ] 5% - [ ] 20% - [ ] 1% > **Explanation:** An investment with a 10% annual return is yielding 10% per annum. ### Which Latin term translates to "each year"? - [ ] Per diem - [x] Per annum - [ ] Per capita - [ ] Per se > **Explanation:** Per annum is the Latin term that translates to "each year." ### In financial reporting, what does per annum help to standardize? - [ ] Weekly earnings - [x] Annual performance metrics - [ ] Daily expenses - [ ] Monthly subscriptions > **Explanation:** Per annum helps to standardize annual performance metrics in financial reporting.

Thank you for exploring the concept of “Per Annum” and taking our informative quiz. Keep learning and mastering your financial terminology!

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