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.

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Chapter 3, Section 6

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Chapter 3 section 6

Chapter 3, Section 6

Annuities


I can

  • Calculate the future value of an ordinary annuity.

  • Calculate the present value of an ordinary annuity.

I can…


What the heck is an annuity

  • 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?


What s the future value of 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?


What s the present 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?


Time to practice

  • P. 118, 11-13

  • P. 119, 16-18, 21-22, 25-27

Time to practice!


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