Review Page 468 #1,3,5,7,9,10


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1 MAP4C Financial Student Checklist Topic/Goal Task Prerequisite Skills Simple & Compound Interest Video Lesson Part Video Lesson Part Worksheet (pages) Present Value Goal: I will use the present value formula to calculate missing values. Annuity Formula Goal: I will use the annuity formula to calculate the future value of a regular annuity. Annuity with Graphing Technology Goal: I will use the TVM Solver to calculate missing values of a regular annuity Present Value of an Annuity Goal: I will use the TVM Solver to calculate missing values of the present value of annuities. Journal Video Lesson Worksheet Page 407 #, Journal Video Lesson Page 45 #3 Journal 3 Video Lesson Page 46 #57, 9,3 Journal 4 Video Lesson Page 43 #3,4,9,5.6 Review Page 468 #,3,5,7,9,0 Test & Assignment
2 Financial Review Simple Interest I = Prt interest($) principal interest rate Time as a fraction of ONE year Time as a fraction of ONE year examples:. years t=/. 4 months t=4/ 3. 4 weeks t=4/5 Time Periods in Year days = 365 weeks = 5 months = Amount of An Investment A = P + I. Jeff invests $500 into an account that pays 4% per year simple interest. If he leaves the money invested for 5 months, what is the amount of his investment?
3 Compound Interest making interest on interest P + I Amount A=P( + i) n principal Interest rate PER compounding period Total times interest is paid Compounding Frequencies annually = semi annually = monthly = weekly = 5 bi weekly = 6 daily = 365. Jake invests $5000 into an account that pays 5% per year compounded monthly for 3 years. How much interest did he earn? Jake made $ in interest
4 review PV.notebook Present Value (review 3C) Present value is the amount that needs to be invested now to have a future value. (the principal needed to be invested) The formula was developed from the compound interest formula. A= P(+i) n PV = A (+i) n
5 review PV.notebook Examples. How much needs to be invested at 0% per year compounded semi annually for 8 months in order to have $5500?. Amanda needs $9000 in 3 years time. She can invest the money at 4% per annum compounded quarterly. How much must she invest?
6 3annity formula.notebook Amount of an Annuity An annuity is a series of equal payments made at regular intervals. The payments are made at the end of each compounding period. The amount of an annuity is the sum of the regular deposits plus interest. Examination of how it works $ is deposited at the end of each quarter for.5 years in an investment account that earns 0% per year compounded quarterly. i = = 0.05 n =.5x4 = 6 Using the compound interest formula will not work because is added each quarter. Quarter Starting balance Interest earned (Prt) Deposit Ending balance (starting+interest+deposit) Total The amount of the annuity is How much interest is earned? A = P + I I = A P = = 74.48
7 3annity formula.notebook Annuity Formula A R i n is the amount in dollars is the regular payment in dollars interest rate PER compounding period is the total number of compounding periods Using the previous situation, determine the amount of the annuity and the interest earned. A R i n Textbook  p45 #3
8 4annity calculator.notebook The TVM Solver & Annuities On the graphing calculator access the TVM Solver. APPS FINANCIAL TVMSOLVER N= I= PV= PMT= FV= P/Y= C/Y= PMT: END BEGIN total number of payment annual interest rate as a percent principal or present value regular payment (deposit) amount or future value number of payments per year number of compounding periods per year indicates whether payments are made at the beginning or end of the payment period The calculator can determine any one of the variables by entering the known values and then placing the cursor on the unknown and enter: ALPHA ENTER
9 4annity calculator.notebook Examples:. a) Determine the amount of an annuity on the date of the last if a deposit of $300 at the end of each quarter for 7 years at 6.75% compounded quarterly. N= b) How much money was invested? I= PV= PMT= FV= P/Y= C/Y= PMT: END BEGIN c) How much interest was earned?. Calculate the regular deposit if the amount of the annuity is $700 in.5 years at 5.3% compounded monthly. N= I= PV= PMT= FV= P/Y= C/Y= PMT: END BEGIN Textbook page 46 #5 7,9
10 5present value of annuity.notebook Present Value of an Annuity The present value of an annuity is the principal that must be invested today to provide the regular payments of an annuity. loans are repaid by making equal payments over a fixed period of time trust funds are another example, where money is invested and overtime a regular withdrawal is made the payments form an annuity where the present value is the principal borrowed. when all the payments have been made, the principal and interest due will have been paid (ie. the future value will be zero) Method One: Formula PV= R= i = n = is the present value in dollars is regular PAYMENT in dollars is interest rate per compounding period (decimal) is total number of compounding periods Example: Your long lost uncle sets up an annuity for you. You will be paid $500 at the end of each month for the next 5 years. The first payment will be made month from now. How much must your uncle deposit to provide the annuity if the money earns 5.7% compounded monthly.
11 5present value of annuity.notebook Method TVM Solver When using the TVM Solver, make sure that the value(s) entered follow the following format: FV= 0 PMT = negative number N= I= PV= PMT= FV= P/Y= C/Y= PMT: END BEGIN
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What You ll Learn To solve problems involving compound interest and to research and compare various savings and investment options And Why Knowing how to save and invest the money you earn will help you
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