futurevalueofanordinarysimpleannuity文件材料.ppt

* * Chapter 10 Ordinary Annuities: Future Value And Present value 10.2 future value of an ordinary simple annuity The future value of an annuity is the sum of the future values of all of the payments (evaluated at the end of the last payment interval) The future value of a four-payment annuity 0 1 2 3 4 $1000 $1000 $1000 $1000 interval number $1000(1.08) $1000(1.08)2 $1000(1.08)3 n=3 n=2 n=1 FV of annuity=sum of them 4 3 2 1 0 ($1200) $500 $500 $500 $500 Application Of The Future Value Of An Annuity Most applications of the future value calculation fall into two categories: ? Determining the total amount of principal plus interest that will be accumulated at the end of a series of equal regular investments earning p per payment interval. ?Determining the single payment at the end of an annuity that is economically equivalent to the annuity. The value that should be used for p in this case is the time valued of money. In other words, p is the interest rate (per payment interval) at which money could be invested. Example Heina has been contributing $300 at the end of each month for the past 15 months to a savings plan that earns 6% compounded monthly.What amount will he have 1 year from now if he continues with the plan? Solution:  Given R=$300, n=27 , j=6% compounding monthly, m=12 (per month) Algebraic method: Financial calculator method 0 27 0.5 300 8649.11 One year from now, Heinz will have accumulated $8649.11. PV n 1/y +/- PMT CPT FV Example Calculate the future value of an ordinary annuity with payments of $600 every 6 mon