Mgf1107lecture28 - MGF 1107 EXPLORATIONS IN MATHEMATICS LECTURE 28 Annuities To this point we have considered investing or borrowing a fixed amount

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MGF 1107 – EXPLORATIONS IN MATHEMATICS LECTURE 28 Annuities To this point we have considered investing or borrowing a fixed amount of money one time, and considering how the amount changes over time given the effects of simple and compound interest. Annuities represent a series of payments made at regular time intervals. For example if you decide to invest $50 a week, or pay off a loan with payments of $100 a month. In this lecture we will consider fixed annuities , where the same payment is made at each time period. In particular we will focus on deferred annuities , where payments are made to produce a lump sum payout at a later date (a college trust fund or a retirement fund being typical examples), and installment loans where a lump sum is paid followed by a series of regular payments (car loans and mortgages being prime examples). Ex. (10.21)
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Note: In general, the formula for calculating a fixed deferred annuity is given by where F is the future value, L is the future value of the last payment, p is the interest rate as a decimal, and T is the number of payments.
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Ex.
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This note was uploaded on 09/22/2011 for the course MAC 2311 taught by Professor Evinson during the Spring '08 term at University of Central Florida.

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Mgf1107lecture28 - MGF 1107 EXPLORATIONS IN MATHEMATICS LECTURE 28 Annuities To this point we have considered investing or borrowing a fixed amount

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