Annuities, Stocks, and Bonds Chapter Eleven Annuities, Stocks, and Bonds

Annuities and Retirement Accounts Section 11.1 Annuities and Retirement Accounts

Definitions: Annuity: a series of equal payments made at regular intervals. Ordinary Annuity: Annuity in which payments are made at the end of the period Payment Period: the time between payments Term: the time from the first payment through the last payment

To find the Amount of an Annuity: Amt = Payment x # from table on p 417 At the end of every quarter, $2000 is put into a retirement plan that earns 6% compounded quarterly. Find the future value in 5 years.

Bob Nelson deposits $250 into a retirement account at the end of every month for 30 months. The fund hold international stocks and Nelson optimistically thinks it may yield 12% compounded monthly. Find the future amount.

Annuity DUE Annuity DUE: payments are made at the beginning of each period instead of the end. 1. Add 1 to the # of periods 2. Amount = payment x # from table 3. Subtract ONE PAYMENT from that amount.

If $1000 is deposited at the beginning of every six months into an account that earns 5% compounded semiannually, find the amount after 8 years.