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Source: College Mathematics
, Rockswold G., Bennett J., and Briggs W.
C:/CLASES_COLEGIO/2007/NOTAS/0102/
02/28
Math 1332  College Mathematics
Chapter 4B Notes
Savings Plans and Investments
Sometimes we do not have large amounts of money to initially invest/deposit into a savings account;
however we may afford to make periodic payments (PMT) instead and let it grow.
Consider your
retirement, savings, college funds for your children, and other investments.
Definitions
Annuity
– What financial planners call any series of equal, regular payments.
Ordinary Annuity
– A savings plan in which payments are made at the end of each month.
Annuity Due
– A plan in which payments are made at the beginning of each period.
Endowment
– An account that provides a permanent source of income without reducing its principal.
Savings Plan Formula (Regular Payments)
:
A = PMT x
( (1 + (APR / n)
nY
) – 1 )
, where
(APR / n)
A
= accumulated balance (also referred to as FV, future value)
PMT
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 Fall '11
 MariselaA.Martinez
 Math

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