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.

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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 earn? Use A = P(1 + i) n

Future Value of Annuities LG: I can describe key features of annuities and solve problems involving the future value of an annuity

Annuities An annuity is a series of payments made at regular intervals In an ordinary simple annuity, payments are made at the end of each compounding period The amount of an annuity is the sum of the regular deposits plus interest

Example 1 – Using an Annuity Table $450 is deposited at the end of each quarter for 1.5 years in an investment account that 10% per year compounded quarterly A)What’s the amount of the annuity? B)How much interest does the annuity earn? QuarterStarting Balance Interest Earned 2.5% DepositEnding Balance 1$ Total: + =

Using a Formula to Calculate Amount of an ordinary simple annuity

Example 2 (Revisit example 1) $450 is deposited at the end of each quarter for 1.5 years in an investment account that 10% per year compounded quarterly A)What’s the amount of the annuity? B)How much interest does the annuity earn?

Homework Pg. 415 # 1-3, 6, 9, 12