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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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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.
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.
 Spring '08
 EVINSON
 Math, Calculus

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