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Lecture 5

MATA32H3 Lecture Notes - Lecture 5: Integral, Differential CalculusPremium

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Raymond Grinnell

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MATA 32 Lecture 5 Annuities and Limits
Annuities are a sequence of payments of a fixed amount made at regular intervals of
Ordinary annuity: Paid at end of intervals
Annuity due: Paid at start of intervals
Formulas for the ordinary annuity (i.e. FV and PV) can be modified for annuity due
o payment amount
o interest per payment period
o total number of payments in the compounding sequence
of an ordinary annuity = ( of all ordinary payments)
of an ordinary annuity = ( of all ordinary payments)
At the end of each of 4 years, we pay $100 () into an ordinary annuity and interest is 9% APR.
What is the present value (PV) of the annuity?
How to Interpret PV = $323.97:
Year 1: 
 ; Payment #1
; Instant amount after payment #1 is made
PV: amount of money needed to invest
in order to issue future payments
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