Per Annum

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

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