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E,chapter5and6

# E,chapter5and6 - • Interest rate 10 comp quarterly for 5...

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Annuities and Mortgages Definition: Series of equal cash flows that you pay or receive during a period of time. 2 types: 1.End of period (ex: Mortgage, car payments) 2.Beginning of period (ex: Rent)

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Future value of annuities (End of period) Annuity of 2000\$ at the end of each year during 10 years Interest rate: 10% compound semi-annually FVA ???? Same problem if the deposits are made in the beginning of the period….FVA ???? Same problem if the deposits are made semi-annually Same problem if the deposits are made quarterly
FVA 1. Annuity of 1000 \$/year (end of the year) during 5 years. Then we leave it as a deposit for another 5 years.

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Unformatted text preview: • Interest rate : 10% comp quarterly for 5 years • Interest rate : 8% comp semi-annually afterwards. 2. Annuity of 1000 \$ / year (end of the year) during 10 years. • Interest rate : 10% eff-ann for 5 years. • Interest rate : 14% eff-ann afterwards. 3. Problem 2 again with inversed rates. FVA 1. 1 000 000 \$ in 40 years (retirement) • Interest rate : 8% comp quarterly for 20 years • Interest rate : 12% comp quarterly afterwards • “C” at the end of each quarter ????? 2. Same problem with C at the beginning of each quarter....
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