Annuity:  Future Value -- Section 9.2 --

 Annuity: Future Value Annuity: Payment or Rent FV = Future Value P = Payment or Rent  i =  r ÷ k,  r = is annual rate, k = number of periods per year n = number of years

Compound Interest and Annuities Click  for Calculator You decide to save for your child's college education by depositing \$100 at the end of each month into a savings account paying 6% interest compounded monthly.  How much money will be in the account after 18 years?
 Solve Step i = 0.06 ÷ 12 = 0.005 k = 12, r = 0.06, Monthly means 12 times a year P is payment = 100, n = 18 years Find the Future Value You would have \$38,735.32 after 18 years. (before taxes) Enter 100 × ( (1 + 0.06 ÷ 12 )  xy ( 12 × 18 ) - 1)  ÷ .005  [enter or =] in your calculator Hint: don't round until you are completely finished with your calculations.  You decide to save for your child's college education by depositing \$200 at the end of each month into a savings account paying 6% interest compounded monthly.  How much money will be in the account after 18 years? [Solution]  You want to save \$35,000 for a pool.   How much should you deposit each month with an annual rate of 3% for 5 years in order to save for the pool?
 Solve Step i = 0.03 ÷ 12 = 0.0025 k = 12, r = 0.03, Monthly means 12 times a year FV is payment = 35,000, n = 5 years Find the Future Value P = 541.40 You make 60 equal payments of \$541.40  in order to save \$35,000. Enter 35,000 × .0025 ÷ ( (1 + 0.03 ÷ 12 )  xy ( 12 × 5 ) - 1)   [enter or =] in your calculator Hint: don't round until you are completely finished with your calculations.  You want to save \$20,000 for a car.   How much should you deposit each month with an annual rate of 9% for 4 years in order to save for the car? [Solution] Tutorials and Applets by
Joe McDonald