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Chapter 3, Section 6

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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  1. Chapter 3, Section 6 Annuities

  2. Calculate the future value of an ordinary annuity. • Calculate the present value of an ordinary annuity. I can…

  3. 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?

  4. 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?

  5. 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?

  6. P. 118, 11-13 • P. 119, 16-18, 21-22, 25-27 Time to practice!

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