Per annum definition

What is Per Annum?

Per annum refers to a duration of one year, or on a yearly basis. The term is commonly used in regard to a sum due at intervals of one year or over the course of a year. As such, it is typically found in contracts involving the per annum amount of interest owed to a lender. It is a useful concept for translating a revenue or expense item generated or incurred over a short period of time into a standard annual unit of measure.

Examples of Per Annum

Several examples of how the per annum term is used are as follows:

  • Expected cost. The per annum cost to maintain a car is $4,000; thus, a vehicle owner can be expected to pay out a total of $4,000 in maintenance costs for his automobile over a one-year period.

  • Expected sales. The per annum gross sales from a sales territory is $5 million; thus, a company's sales staff can expect to generate $5 million in sales per year that originate from a specific sales territory.

  • Expected interest rate. The per annum interest rate charged on a credit card is 36%; this is derived from a 3% monthly rate that is charged on unpaid monthly balances (calculated as 3% x 12 months = 36% on a noncumulative basis).

  • Expected subscription cost. A monthly magazine charges $5 per issue, so the per annum amount of a subscription is $60.