MATH 120 Lecture 4: Chapter 5.4 Present Value and Annuity Due
Document Summary
Professor brandon sheehan chapter 5. 4 present value and annuity due. Present value is, wellfinding the present value of ordinary annuity or annuity due. Basically, it means how much money could get right now if the payments ended. For example, a dollar was a lot back then. Present value of ordinary annuity = p = r 1 - Present value of annuity due = p = r + r 1 - # of compounds n = (# of compounds)(# of years) To clarify, the - sign in front of the n is a negative, not a minus. Find the present value of an ordinary annuity which has payments of ,800 per year for 11 years at 6% compounded annually. Again, we can find other variables within the equation. Find the payment necessary to amortize (paying more interest at first, then principal) an 8% loan of ,500 compounded quarterly in 2. So, we"re trying to find the payment, or r.
