+ All Categories
Home > Documents > Savings Annuities. An annuity is where you make a series of periodic payments into an account. The...

Savings Annuities. An annuity is where you make a series of periodic payments into an account. The...

Date post: 01-Apr-2015
Category:
Upload: milo-tharrington
View: 214 times
Download: 1 times
Share this document with a friend
Popular Tags:
15
Savings Annuities
Transcript
Page 1: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

Savings Annuities

Page 2: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

Savings Annuities• An annuity is where you make a series of

periodic payments into an account.• The typical types of accounts are

superannuation and loans.• There are basically two types of annuities.– Future Value –Present Value

Page 3: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

Future Value• This is when the lump sum of money will exist

in the FUTURE.• You need to read the question and decide on

when the lump sum will exist.• Then you need to write down the variables.• Which ever one you are missing – is the one

you have to find.

Page 4: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

Finding FV

Page 5: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

N =

I% =

PV =

Pmt =

FV =

P/Y =

C/Y =

15 x 1

6

0

-600

?

1

1

Solution : $13965.58

Page 6: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

Note that PMT is negative

Page 7: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.
Page 8: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

Future Value - n• You need to read the question to make sure

that the LUMP SUM will exist in the FUTURE and there are a series of deposits.

• Write down the variables – check P/Y and C/Y• Enter the data in and solve for n – F1• The answer you get will be in terms of the

number of periods – i.e. number of months.

Page 9: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

• There are a regular series of payments – so it has to be an annuity question.

• The money will exist in the FUTURE – so it has to be a future value question.

• We have the FV the PMT, the Rate (I%) – we haven’t got n.

Page 10: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

N =

I% =

PV =

Pmt =

FV =

P/Y =

C/Y =

?

6.15

0

-400

15000

12

12

Solution : 34.39

Page 11: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

34.39 months

Page 12: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

Future Value – I%• You need to read the question to make sure

that the LUMP SUM will exist in the FUTURE and there are a series of deposits.

• Write down the variables – check P/Y and C/Y• Enter the data in and solve for I% – F2• The answer you get will be the rate required.

Page 13: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

• There are a regular series of payments – so it has to be an annuity question.

• The money will exist in the FUTURE – so it has to be a future value question.

• We have the FV the PMT, the term – we haven’t got I%.

Page 14: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

N =

I% =

PV =

Pmt =

FV =

P/Y =

C/Y =

4 x 4

?

0

-1500

28000

4

4

Solution : 8.08%

Page 15: Savings Annuities. An annuity is where you make a series of periodic payments into an account. The typical types of accounts are superannuation and loans.

8.08%


Recommended