today in precalculus go over homework need a calculator notes: annuities (future value) homework
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Today in Precalculus• Go over homework• Need a calculator• Notes: Annuities (Future Value)• Homework
Annual Percentage Rate (APR)
• Often accounts are given an APR.• This assumes the interest is compounded
only once a year.• To determine the compounding interest rate
divide the APR by the number of times in a year the interest is compounded.
Annuities• A sequence of periodic payments instead of a
lump sum.• Ordinary annuities are when the deposits are
made at the end of each period at the same time the interest is posted in the account.
1 1niFV R
i
FV: future valueR: amount of each equal paymenti: interest rate (if given APR, divide by number of payments in a year)n: total number of payments
Example 1
(25 4)(1 .0683/ 4) 1250.0683/ 4
FV
=$64,952.14
Given APR and interest is compounded quarterlyso divide i by 4
Betsy invested $250 × 4 × 25= $25,000 So she made $64,952.14 - $25,000 = $39,952.14 in interestwhich is a return of 160% on her investment.
Example 2
(15 2)(1 .0739 / 2) 1300.0739 / 2
FV
=$15,993.37
Given APR and interest is compounded twice a yearso divide i by 2
Example 3
15,000=73.919RR=$202.92Josh needs to deposit $202.92 each month
(12 5)(1 .0823/12) 115,000.0823/12
R
Given APR and interest is compounded monthlyso divide i by 12
Homework• Pg 341: 13-16, 47-50• Chapter 3 test: Wednesday, January 20
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