Annuities

1
Annuities

• A series of equal payments over equal time
  periods.

Ex. Car Payments, House Payments,
Christmas Club Accounts, IRAs
2
Annuities

• Present Value (Get the NOW!)
• Future Value (Save the for Later)
• Formulas are on pages 340 and 341. Do NOT
  Memorize!
• They will be given.

1. Determine the Type (Present or Future). 2.
Substitute the given info into the Formula. 3.
Calculate the answer with the calculator.
3
Annuities

• If you can afford a 600 monthly house payment
  how much could you borrow if your loan is for 20
  years at 6 APR?

• 1. Type Present
• 2. Substitute
• Calculate

4
Annuities

• Find the monthly house payment to purchase a
  60000 house with a 10000 down payment by
  borrowing for 15 years at 6 APR?

• 1. Type Present
• 2. Substitute
• Calculate

5
Annuities

• How much would you have to save each month to pay
  cash for a 60000 house in 15 years if you earn
  3 APR on your savings?

• 1. Type Future
• 2. Substitute
• Calculate