Lecture8 - Eco 635.02 Prof. Zhylenko Annuities and...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Annuity – finite series of equal payments that occur at regular intervals If the first payment occurs at the end of the period, it is called an ordinary annuity If the first payment occurs at the beginning of the period, it is called an annuity due Perpetuity – infinite series of equal payments Annuities and Perpetuities Eco 635.02 Prof. Zhylenko 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Perpetuity: PV = C / r Annuities: - + = + - = r r C FV r r C PV t t 1 ) 1 ( ) 1 ( 1 1 Annuities and Perpetuities – Basic Formulas Eco 635.02 Prof. Zhylenko 2
Background image of page 2
After carefully going over your budget, you have determined you can afford to pay $632 per month toward a new car. You call up your local bank and find out that the going rate is 1 percent per month for 48 months. How much can you borrow? 54 . 999 , 23 01 . ) 01 . 1 ( 1 1 632 48 = - = PV Annuity – Example 6.5 Eco 635.02 Prof. Zhylenko 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
You are ready to buy a house, and you have $20,000 for a down payment and closing costs. Closing
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/17/2010 for the course ECON 365 taught by Professor Svitlanazhylenko during the Spring '10 term at CUNY Hunter.

Page1 / 14

Lecture8 - Eco 635.02 Prof. Zhylenko Annuities and...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online