Section3.56

# Section3.56 - Determining the Term of an Annuity(section 3.5 Given S or A R i Determine n Method You can use logs to solve S=R s n |i or A=R an |i

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Determining the Term of an Annuity (section 3.5) Given: S or A, R, i Determine: n Method You can use logs to solve: S = R i n s | or A = R i n a | Problem n will rarely be an integer will need to calculate a final payment that is different from R in order to have equivalence

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Two Methods 1. The last regular payment is increased by an amount which will make the payments equivalent to A or S 2. A smaller concluding payment is made one interest period after the last regular payment Example 3.5.1 You receive an inheritance of \$25,000. You invest it at j 12 = 9%. How many monthly payments of \$250 can you expect to receive and what is the size of the final payment using both methods?
Solution to 3.5.1

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A couple wishes to accumulate \$10,000 by depositing \$250 at the end of each quarter in a fund earning j 4 = 16%. How many deposits must they make and what is the size of the final deposit under both methods? Solution to 3.5.2
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## This note was uploaded on 04/14/2010 for the course ACSCI 2053 taught by Professor Kopp during the Spring '09 term at UWO.

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Section3.56 - Determining the Term of an Annuity(section 3.5 Given S or A R i Determine n Method You can use logs to solve S=R s n |i or A=R an |i

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