Review Annuity series of equal payments payments occur at the end of a compounding period payments start the next compounding period A/P is a magic number to convert a current investment or value into a equivalent value of payments in the future

Review We also met P/F which is just the reciprocal of F/P F/P - My name is F/P - cash moves to the future with me P/F - My name is P/F - I move the cash to the left Remember the canceling trick P/F * Future Cash = Present value

The Pattern Listen to the story problem determine who’s perspective you are taking write down when cash moves into (+) or out of of (-) the viewers pocket write the cash flows down on a time line Multiply the terms of the cash flow by the correct magic number to sweep them to equivalent values at the evaluation point Add the numbers up and put your nose in the pot to see if there is enough money there