# Chapter 3, Section 6 - PowerPoint PPT Presentation

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Chapter 3, Section 6. Annuities. Calculate the future value of an ordinary annuity. Calculate the present value of an ordinary annuity. I can…. A series of equal payments made at regular intervals of time.

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Chapter 3, Section 6

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## Chapter 3, Section 6

Annuities

• Calculate the future value of an ordinary annuity.

• Calculate the present value of an ordinary annuity.

### I can…

• A series of equal payments made at regular intervals of time.

• Examples: Rent, salaries, loan payments, and making regular deposits into a saving account.

• An annuity due is when payments are made at the beginning of each period.

• An ordinary annuity is when the payments are made at the end of each period.

### What the heck is an annuity?

• The amount of money in an account after a series of equal payments are made to it, including interest the money has earned.

• So…the total amount of money in your account at the end!

• You can calculate this by looking at a table and finding the multiplier—just like we did with interest.

• Example 1, p. 116

• Check your understanding A & B

### What’s the future value of an annuity?

• The balance needed in an account in order to make a series of payments from the account.

• Even when money is being taken out of the account, you still earn interest on the money in the account.

• To find the present value of an annuity—use a table to find the multiplier.

• Example 2, p. 117

• Check you understanding C & D

### What’s the present value of an annuity?

• P. 118, 11-13

• P. 119, 16-18, 21-22, 25-27