Annuities; Loan Repayment  Find the 5-year future value of an ordinary annuity with a contribution of $500 per quarter into an account that pays 8%

Slides:

Advertisements

Similar presentations

Your Money and and Your Math Chapter Credit Cards and Consumer Credit

Advertisements

Chapter 3 Mathematics of Finance

Example 5 Home Mortgage Chapter 5.6 A couple that wants to purchase a home with a price of $230,000 has $50,000 for a down payment. If they can get a 25-year.

Example 4 Home Mortgage Chapter 5.6 A couple who wants to purchase a home has $30,000 for a down payment and wants to make monthly payments of $2200. If.

Amortization. Formulas Simple Interest Amortized Loan Formula.

Annuities and Amortization

Time Value of Money, Loan Calculations and Analysis Chapter 3.

3.3 Future value of an Annuity;Sinking Funds An annuity is any sequence of equal periodic payments. An ordinary annuity is one in which payments are made.

Section 1.1, Slide 1 Copyright © 2014, 2010, 2007 Pearson Education, Inc. Section 8.4, Slide 1 Consumer Mathematics The Mathematics of Everyday Life 8.

1 5.3 ANNUITY.  Define ordinary and simple annuity  Find the future and present value  Find the regular periodic payment  Find the interest 2.

Homework, Page 341 Find the amount A accumulated after investing a principal P for t years at an interest rate of r compounded annually. 1.

Find the amount of an annuity that consists of 24 monthly payments of $700 each into an account that pays 8% interest per year, compounded monthly. NOTE:

Example 2 Future Value of an Annuity Chapter 5.6 Harry deposits $200 at the end of each month into an account that pays interest 12% per year, compounded.

Section 1.1, Slide 1 Copyright © 2014, 2010, 2007 Pearson Education, Inc. Section 8.4, Slide 1 Consumer Mathematics The Mathematics of Everyday Life 8.

Warm up You took out a loan for $1460 and the bank gave you a 5 year add on loan at an interest rate of 10.4%. How much interest will you pay and how much.

Chapter 5 Mathematics of Finance

Chapter 5 Section 5.4 Amortized Loans. An amortized loan is a type of investment (for the loaner) in which the amount of the loan, plus the interest is.

Present Value of an Annuity; Amortization (3.4) In this section, we will address the problem of determining the amount that should be deposited into an.

Consumer Math p Definitions  Down payment – part of the price paid at the time of purchase  Financed – borrowed  Mortgage – a property loan.

Time Value of Money Problems

Chapter 3 Mathematics of Finance Section 3 Future Value of an Annuity; Sinking Funds.

Minds On: Future Value Tom and Beth are twins. They save for retirement as follows: – Starting at age 25, Tom deposits $1000 at the end of each year for.

Regular Deposits And Finding Time. An n u i t y A series of payments or investments made at regular intervals. A simple annuity is an annuity in which.

Mathematics of Finance

Q3: Ms. Rigsby made a $40,000 down payment on a $165,000 house and took out a 20 year mortgage (at 6% compounded monthly) on the balance. How much will.

259 Lecture 3 Spring 2015 Finance Applications with Excel – Annuities an Amortization.

Choi.  An annuity is a sequence of equal payments made at equally spaced intervals of time.  The period of an annuity is the time interval between two.

Discounted Cash Flow Valuation.  Be able to compute the future value of multiple cash flows  Be able to compute the present value of multiple cash flows.

Pg. 282 Homework Worksheet#4 – 6 Pg. 268#15 – 18, 29, 41, 47 – 49 #1 6% quarterly#28.25% monthly #3 7.20% daily#48.5% quarterly #5 $36,013.70#6$13,

Mathematics of Finance. We can use our knowledge of exponential functions and logarithms to see how interest works. When customers put money into a savings.

Loans Paying back a borrowed amount (A n )in n regular equal payments(R), with interest rate i per time period is a form of present value annuity. Rewrite.

Formulas for Compound Interest

Loans and Investments Lesson 1.5.

Pre-AP Pre- Calculus Chapter 3, Section 6 Mathematics of Finance

 What large purchases or expenditures do you foresee in your future?  How are you preparing to make these purchases a reality?

Mathematics of Finance. We can use our knowledge of exponential functions and logarithms to see how interest works. When customers put money into a savings.

AAA Chapter 8 Bingo Review. Solve If you Invested $8,000 for 30 month sand received $1,000 in simple interest, what was the rate?

Present Value Present value is the current value of a future sum.

Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 1 Chapter 11 Annuities, Stocks, and Bonds Section 1 Annuities and Retirement Accounts.

Chapter 3, Section 6 Annuities. I can… Calculate the future value of an ordinary annuity. Calculate the present value of an ordinary annuity.

Lecture 20 Ordinary Annuities Ana Nora Evans 403 Kerchof Math 1140 Financial Mathematics.

Quick answers If the bank is offering 12% per year compounded quarterly what would be the value of “i” in the Amount of an annuity formula? If the Nicole.

Algebra Geometric Sequences Objectives of this Section Determine if a Sequence Is Geometric Find a Formula for a Geometric Sequence Find the Sum.

1. Difference Equation II 2. Interest 3. Amount with Interest 4. Consumer Loan 1.

Economics.  Interest can mean two things to the consumer…  If you put money in a bank, you will get paid interest on your deposit over time.  If you.

Present Worth of Annuities make equal payments The present value of an annuity that pays out n regular payments of $R at the end of each time period from.

Payments and Total Interest The two formulas used so far are only useful if we know what the regular payment is going to be. If we know what a future amount.

8 – 5 Properties of Logarithms Day 2

Copyright © Cengage Learning. All rights reserved. Sequences and Series.

10/25 More work with annuities, mortgages, etc Simple interest Compound interest Present value effective rate Annuity Present value of annuity.

 Which rate is better if you’re a saver?  7.30% compounded quarterly  7.275% compounded monthly  7.25% compounded weekly  Find equivalent annually.

Time Value of Money. Assume a couple puts $1,000 in the bank today. Their account earns 8% interest compounded annually. Assuming no other deposits were.

Pg. 301 Homework Pg. 309#25 – 39 odd Pg. 312#53 – 54 Pg. 311#1 – 12 all #1x = 10,000#2x = 1/e#3x = 5.25 #4x = ½ #5x = 97#6x = 1001 #7x = 16#8x = 531,434#9x.

Annuities, Loans, and Mortgages Section 3.6b. Annuities Thus far, we’ve only looked at investments with one initial lump sum (the Principal) – but what.

5-1 Computing APRs What is the APR if the monthly rate is.5%? What is the APR if the semiannual rate is.5%? What is the monthly rate if the APR is 12%

Determine the amount saved if $375 is deposited every month for 6 years at 5.9% per year compounded monthly. N = 12 X 6 = 72 I% = 5.9 PV = 0 PMT = -375.

Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 3.6 Mathematics of Finance.

10/23 More interest Compound interest formula A =.

Chapter 3 Exponential, Logistic, and Logarithmic Functions

Annuities By Jordan Moncada. ANNUITY  A series of payments made in equal intervals (loans, retirement plans, etc.)

Slide Copyright © 2009 Pearson Education, Inc. AND Active Learning Lecture Slides For use with Classroom Response Systems Chapter 11 Consumer Mathematics.

TVM Review. What would your future value be if you invested $8,000 at 3% interest compounded quarterly for 15 years?

Lesson 2 – Annuities Learning Goal I can solve for the future value of an annuity.

Copyright © 2012 Pearson Education, Inc. All rights reserved 5.2(Day2) Future Value of an Annuity.

Time Value of Money Annuity.

Mathematics of Finance

Chapter 3 Mathematics of Finance

Chapter 3 Mathematics of Finance

Lesson 2 The amount of an Annuity

Annuities, Stocks, and Bonds

Presentation transcript:

Annuities; Loan Repayment

 Find the 5-year future value of an ordinary annuity with a contribution of $500 per quarter into an account that pays 8% per year compounded quarterly

 Harry deposits $200 at the end of each month into an account that pays interest 12% per year, compounded monthly. Find the future value for every 4-month period, for up to 36 months.

 Suppose a retiring couple wants to establish an annuity that will provide $2000 at the end of each month for 20 years. If the annuity earns 6%, compounded monthly, how much must the couple put in the account to establish the annuity?

 A couple who wants to purchase a home has $30,000 for a down payment and wants to make monthly payments of $2200. If the interest rate for a 25-year mortgage is 6% per year on the unpaid balance, what is the price of the house they can buy?

 A couple that wants to purchase a home with a price of $230,000 has $50,000 for a down payment. If they can get a 25-year mortgage at 9% per year on the unpaid balance.  What will be their equal monthly payments?  What is the total amount they will pay before they own the house outright?  How much interest will they pay?

 Pages  1-3,7,11,14,15,17, 18,19,21,23-27