MATH 120 Lecture 3: Chapter 5.3 Annuity
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Annuity - fixed sum of money paid to someone for the rest of their life. Ordinary annuity = s = r n (1 + i) - 1 i. Annuity due = s = r (n + 1) (1 + i) R = principal i and n are the same thing as in 5. 2, but in case you forgot: i = interest. # of compounds n = (# of compounds)(# of years) Find the future value of the following ordinary annuity payments are made and interest is compounded as given: r = ,000, 6% interest, compounded annually for 15 years. S = r n (1 + i) - 1 i. S = 6000 (1 + 0. 06) - 1 (15) We can find other variables within this equation, too. Ingrid wants to buy a ,000 car in 6 years. So, we"re actually trying to find what the principal is, or r.
