calculating the periodic payment参考.ppt

Chapter 11 Ordinary Annuities: Payment Size, Term, and Interest Rate 11.1 calculating the periodic payment Some circumstances in which the periodic payment, R, must be calculate are: calculating the periodic payment Step 1: calculate the periodic interest rate per payment--P step 2: Example Markham Auto Body wishes to accumulate a fund of $150,000 during the next 18 months in order to open at a second location. What constant amount should it pay at the end of each month into a money market savings account with an investment dealer, in order to attain its savings objective? The planning assumption is that the account will earn 4.8% compounded monthly. Sn=$150,000 j=4.8% compounded monthly i=j/m=4.8%/12=0.4%=p n=18 Example Mr. and Mrs. Moris obtain a $20,000 home improvement loan from their bank at an interest rate of 7.5% compounded monthly. What amount paid monthly will reduce the balance to $10,000 after 5 years? Algebraic method: Step 1: calculate An Step 2: calculate PV PV=present value of $10,000 Step 3: R=$262.88 Payments of $262.88 will reduce the balance to $10,000 after 5 years. Financial calculator method Example Douglas and Margaret have already accumulated $125,000 in their RRSP. They are attempting to estimate the annual contributions they must make in order to retire in 15 years, when Doug turns 60. Their goal is to have enough funds in the RRSP to purchase a 25-year annuity that will pay $5000 at the end of each month. The planning assumptions are an 8% annually compounded return on their RRSP and an 8.1% monthly compounded return on the annuity purchased with their RRSP funds. What combined RRSP contributions should they make at the end of each of the next 15 years? Step 1: calculate the future value of annuity 1--Sn Term=15 years n=15 j=8.0% compounded annually i=j/m=8.0% Step 2: calculate the future value of $125,00