Lesson 6 Regular Annuities-Future Value

Slides:

Advertisements

Similar presentations

Simple and Compound Interest

Advertisements

MATH 102 Contemporary Math S. Rook

 A one time investment of $67,000 invested at 7% per year, compounded annually, will grow to $1 million in 40 years. Most graduates don’t have $67,000.

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.

Chapter 8.4 Annuities (Future value; different compounding periods)

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.

3-3 Example 1 Find the simple interest earned on an investment of $500 at 7.5% for 6 months. 1. Write the simple interest formula. I = prt Lesson 3-3 Example.

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.

Annuity Payments LG: I can calculate the payment of an annuity in present value and future value situations.

Lesson 3-3 Example Solve. Daniel put $1,500 into a savings account. The simple interest rate is 4.5%. How much interest will Daniel earn in 1 month?

8.2 Day 2 Compound Interest if compounding occurs in different intervals. A = P ( 1 + r/n) nt Examples of Intervals: Annually, Bi-Annually, Quarterly,

MTH108 Business Math I Lecture 25.

Summary of Interest Formula. Relationships of Discrete Compounding.

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.

Annuity investments demand regular equal deposits into an investment.

Warm-Up: Compound Interest Raquel invests $4000 for 6 years in a bond that earns 7% per year compounded semi-annually. How much interest does the bond.

Annuity investments demand regular equal deposits into an investment.

Future Value of an Ordinary Simple Annuity Annuity - Series of equal payments or deposits earning compound interest and made at regular intervals over.

8 – 5 Properties of Logarithms Day 2

Introduction to Accounting I Professor Marc Smith CHAPTER 1 MODULE 1 Time Value of Money Module 3.

11.2 Exponential Functions. General Form Let a be a constant and let x be a variable. Then the general form of an exponential function is:

You deposit $950 into an account that earns 4 % interest compounded annually. Find the balance in the account after five years. In your last calculation,

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.

Simple and Compound Interest Simple Interest I = Prt Compound Interest A = P(1 + r)

Amount of an Annuity. So far, all of our calculations have been based on the idea that once you deposit a certain amount of money, the account remains.

The Amount of an Annuity So far, all of our calculations have been based on the following concept: You deposit a certain amount of money, and leave it.

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%

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

Calculate using the formula MCR 3UI Unit 7 – Day 2.

Introduction to Accounting I Professor Marc Smith CHAPTER 1 MODULE 1 Time Value of Money Module 4.

1 Project 2- Stock Option Pricing Mathematical Tools -Today we will learn Compound Interest.

ANNUAL PERCENTAGE YIELD APY Lesson Vocabulary Annual Percentage Yield (APY)- Also called effective annual yield is the rate of return on your investment.

Exercise Write 5% as a decimal Write 6.5% as a decimal Exercise.

Calculating interest You can calculate the time value of your savings by figuring out how much interest you will earn. Principal – the original amount.

Simple and Compound Interest

Financial Applications -Compound Interest

CHAPTER 8 Personal Finance.

Copyright © 2006 Brooks/Cole, a division of Thomson Learning, Inc.

Financial Applications -Annuities (Accumulated Amount)

Simple Interest Formula I = PRT.

Math in Our World Section 8.3 D1 Compound Interest.

Section 4.7 Compound Interest.

Chapter 3 Mathematics of Finance

Ordinary Annuities, Sinking Funds, and Retirement Investments

Example 4 Annuities Show that if regular payments of $1000 are made at the end of each year for 5 years into an account that pays interest at 10% per year.

Lesson 2 The amount of an Annuity

CDs and Annual Yield Lesson 7.3.

Lial/Hungerford/Holcomb/Mullins: Mathematics with Applications 11e Finite Mathematics with Applications 11e Copyright ©2015 Pearson Education, Inc. All.

6.4 Exponential Growth and decay

Lesson 6: Regular Payment of an Annuity

Annuities Student Handout

Unit #4: Sequences & Series

Lesson #7: Regular Annuities- Present Value

Savings and Interest Lesson 4.4.

Simple and Compound Interest

3.6 – Mathematics of Finance

Deferred annuity S.Y.Tan.

Financial Applications -Annuities (Present Value)

Day 86 – Introduce the power of interest

A D ppendix Compound Interest

HOW TO MAKE MONEY WITHOUT DOING ANY WORK

Annuities, Stocks, and Bonds

Bell Ringer Suppose Shawn deposited $2,500 in a savings account which earns 3.5% interest and is compounded monthly. Find the amount he has after six.

CDs and Annual Yield Lesson 25.

Copyright © 2006 Brooks/Cole, a division of Thomson Learning, Inc.

Annual Percentage Yield APY

Copyright © 2019 Pearson Education, Inc.

Presentation transcript:

Lesson 6 Regular Annuities-Future Value June 6th, 2011

An Annuity is a series of equal deposits or payments made at regular intervals of time. R= payment amount/deposit i = interest rate per compounding period n = total number of compounding periods or number of payments This formula looks at ordinary, simple annuities and it is called “the amount” formula. It is also known as the “future value” formula.

We can use the amount/future value formula when: The payment interval is the same as the compounding period A payment is made at the end of each compounding period The first payment is made at the end of the first compounding period.

a) How much will Jackie have in her account in 2.5 years? A=? R= 250 EX1: Jackie invests $250 every 3 months into an account that earns interest at rate of 5%/a compounded quarterly. a) How much will Jackie have in her account in 2.5 years? A=? R= 250 i= n=

b) How much interest did Jackie earn?

a) How much will Michael have to spend on a car? A=? R=325 EX2: Michael is saving up to buy a car. Over the next 4 years, Michael will make monthly deposits of $325 into an account that earns interest at 3.9%/a compounded monthly. a) How much will Michael have to spend on a car? A=? R=325

b) How much interest did he earn?