Present Value and Loans Mat 112. Now, let’s withdraw.

Slides:

Advertisements

Similar presentations

Chapter 4 More Interest Formulas

Advertisements

1. In cell E5, write an Excel formula which can be copied down the column into cells E6:E8 to show the actual loan amount rounded to nearest dollar. The.

Chapter 3 Mathematics of Finance

Chapter 3 Mathematics of Finance

Chapter 10 Section 3 Amortization of Loans. The mathematics of paying off loans. Amortization – The process of paying off a loan. Decreasing annuity!!!!

Discounted Cash Flow Valuation

Chapter 5 Introduction This chapter introduces the topic of financial mathematics also known as the time value of money. This is a foundation topic relevant.

CHAPTER THREE THE INTEREST RATE FACTOR IN FINANCING.

College Algebra Fifth Edition James Stewart Lothar Redlin Saleem Watson.

1 Chapter 11 Time Value of Money Adapted from Financial Accounting 4e by Porter and Norton.

Chapter 5 Time Value of Money

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.

Management 3 Quantitative Methods

Multiple Cash Flows –Future Value Example 6.1

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.

Thinking Mathematically

Annuities – the “Future Value” of periodic deposits Mat 112.

MS-Excel Manual-3 Pradeep Velugoti Lakshman Tallam.

Chapter McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 6 Discounted Cash Flow Valuation.

LSP 120 Financial Matters. Loans  When you take out a loan (borrow money), you agree to repay the loan over a given period and often at a fixed interest.

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

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.

1111 McGraw-Hill Ryerson© 11-1 Chapter 11 O rdinary A nnuities McGraw-Hill Ryerson©

CALCULATING THE COST OF TOTAL CREDIT Personal Finance.

How to finance a car So you need a loan…. What is a down payment? This is the amount you already have saved up in cash to pay towards your car.

CHAPTER 6 Discounted Cash Flow Valuation. Key Concepts and Skills Be able to compute the future value of multiple cash flows Be able to compute the present.

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.

3.6 – Mathematics of Finance

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.

Present Value. Loan questions are Present Value questions This is when the lump sum of money exists NOW. You need to read the question and decide on when.

Dr. Johnny Duke Georgia Highlands College Exponential Applications on the TI 84 TVM Solver.

Bennie Waller – Longwood University Personal Finance Bennie Waller Longwood University 201 High Street Farmville, VA.

Finding the Payment on a Spreadsheet

1 Prentice Hall, 1998 Chapter 5 The Time Value of Money.

9/11/20151 HFT 4464 Chapter 5 Time Value of Money.

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.

What is Your Interest? Discover the impact and power of interest.

Deriving the Present and Future Values Formulas Caroline Gallant MAT 123.

Amortization M 110 Modeling with Elementary Functions V.J. Motto.

Present Value of an Annuity with Annual Payments 1 Dr. Craig Ruff Department of Finance J. Mack Robinson College of Business Georgia State University ©

1 u INTEREST- a payment made for the use of money over a period of time. u INTEREST RATE - The price of using the money over a period of time.

NPV and the Time Value of Money

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.

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

Computer Science & Engineering 4194 Day 9 Financial Functions 1.

DR. NARGUNDKAR PERS 2002 Finance Basics. Classification Corporate Finance  Capital Budgeting – where should we invest?  Capital Structure – where do.

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.

2-1 CHAPTER 2 Time Value of Money Future Value Present Value Annuities Rates of Return Amortization.

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

The Time Value of Money Lesson Starter Objectives Students will be able to –Use a formula to find the future value of a series of payments –Use.

Time Value of Money. Future Value of Money n The value of an investment after it has been compounded with interest for a specific period of time n FV.

(regular withdrawal and finding time)

Topic 16 Exponential and Log Functions and Applications III.

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.

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

5-0 Finding the Number of Periods Start with basic equation and solve for t (remember your logs) FV = PV(1 + r) t t = ln(FV / PV) / ln(1 + r) You can use.

An Overview of Personal Finance The Time Value of Money –Money received today is worth more that money to be received in the future –Interest Rates Nominal.

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%

Computer Science & Engineering 2111 Lecture 6 Financial Functions 1.

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.

LECTURE 6 Quiz #6 If you are going to finance the purchase of a car, would you want the interest on your loan be compounded daily, monthly, quarterly,

Compound Interest Making Money!!!. Compound Interest Solving by Hand A=P(1+r/n) nt P - Initial principal r – annual rate expressed as a decimal n – compounded.

When ever you take a loan out – the goal is to pay off your debt. In the first part of a loan, the majority of your repayments are interest. The way to.

Aim: Money Matters: Amortization Course: Math Literacy Aim: How does money matter? Annuities in reverse: Amortization! Do Now:

Understanding and Appreciating the Time Value of Money

1. What is the order of magnitude difference between an inch and a mile? between an inch and a mile? 2. How many times bigger is a mile compared to an.

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%

Presentation transcript:

Present Value and Loans Mat 112

Now, let’s withdraw

Withdraw from a “present value”

Paying off a Loan

How long does the money last?

Quarterly Withdrawals

Present Value

Another sum of exponentials We use the same “sum of a series” technique, as we used for FV, and arrive at:

2 Versions of the PV formula

Examples for Present Value Mat 112

Compute PV

How much interest?

Compute PMT

Setup, and compute... PMT = $

Example:

Try Another

Car Payments

Purchase Price?

A Bigger Loan If you plan to buy a house and finance $90,000 with a 30-year loan charging 6.6% compounded monthly, what is the size of your monthly payment? Here n = 12(30) = 360 payments. Over the 30 years, what is the total of your monthly payments?