3 6 mathematics of finance
This presentation is the property of its rightful owner.
Sponsored Links
1 / 16

3.6 – Mathematics of Finance PowerPoint PPT Presentation


  • 74 Views
  • Uploaded on
  • Presentation posted in: General

3.6 – Mathematics of Finance. By the end of today, you will be able to:. Find the value of an investment in which interest is compounded annually, a specified amount of times per year, and continuously Compute and Compare Annual Percentage Yields

Download Presentation

3.6 – Mathematics of Finance

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


3 6 mathematics of finance

3.6 – Mathematics of Finance


By the end of today you will be able to

By the end of today, you will be able to:

  • Find the value of an investment in which interest is compounded annually, a specified amount of times per year, and continuously

  • Compute and Compare Annual Percentage Yields

  • Calculate the Present and Future values of an annuity


Interest compounded annually

Interest Compounded Annually


3 6 mathematics of finance

Find the amount A accumulated after investing a principal P for t years at an interest rate rcompounded annually.

P = $12,000, r = 7.5%, t = 7


Interest compounded k times per year

Interest compounded k times per year


3 6 mathematics of finance

You Try! Find the amount A accumulated after investing $1500 for 5 years at an interest rate of 7% compounded quarterly.


Interest compounded continuously

Interest compounded continuously


3 6 mathematics of finance

You Try! Find the amount A accumulated after investing a principal amount of $1250 for 6 years at interest rate of 5.4% compounded continuously


Annual percentage yield apy

Annual Percentage Yield (APY)

  • Used to compare investments

  • It is the percentage rate that, compounded annually, would yield the same return as the given interest rate with the given compounding period


3 6 mathematics of finance

Which investment is more attractive, one that pays 8.75% compounded quarterly or another that pays 8.7% compounded monthly?

Comparing annual percentage yields (APYs)


3 6 mathematics of finance

Ordinary Annuities: A sequence of periodic payments made at the end of each period at the same time the interest is posted in the account.

Future Value of an Annuity


3 6 mathematics of finance

An IRA Account: Amy contributes $50 per month into the Lincoln National Bond fund that earns 7.26% annual interest. What is the value of Amy’s investment after 25 years?


Present value of an annuity

Present Value of an Annuity


3 6 mathematics of finance

You Try! Find the present value (PV) of a loan with an annual interest rate of 4.7%, and periodic payments of $815.37 for a term of 5 years, with payments made and interest charged 12 times per year.


Annual percentage rate apr

Annual Percentage Rate (APR)

The annual interest rate charged on consumer loans

Ex) What is Kim’s monthly payment for a 4-year $9000 car loan with an APR of 7.95% from Century Bank?


Homework

Homework

Pg.342-343

2, 8, 10, 16, 18, 22, 46, 48


  • Login