Annuities, Future Value, and Sinking Funds

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Annuities, Future Value, and Sinking Funds Section 5.3 Annuities, Future Value, and Sinking Funds Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved. Ordinary Annuity Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved.

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Copyright ©2015 Pearson Education, Inc. All right reserved.

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Copyright ©2015 Pearson Education, Inc. All right reserved. Sinking Funds A business sets up a sinking fund so that it will be able to pay off bonds it has issued when they mature. If it deposits $12,000 at the end of each quarter in an account that earns 5.2% interest, compounded quarterly, how much will be in the sinking fund after 10 years? Example: Solution: The sinking fund is an annuity, with The future value is So there will be about $624,370 in the sinking fund. Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved. (200*((1+x/12)^240-1))/(x/12) Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved. Annuity Due Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved.

Copyright ©2015 Pearson Education, Inc. All right reserved.