1. 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

2. 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

3. 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