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Summer Session, Worksheet Lesson 28
Formulas that may be used (found on the course formula sheet):
For the following formulas
:
S
is future value,
P
is present value,
r
is the annual interest
rate,
k
is the number of compounding periods in a year,
t
is time in years,
A
is the amount
of money, and
R
is the amount of payment; with the formula for the periodic interest rate
r
i
k
=
.
5.
Future Value
of an Investment with
continuously compounded
interest:
rt
S
Pe
=
(The amount at the end of an investment when an amount
P
is allowed to grow
with interest compounded continuously.)
6.
Future Value
of an Investment:
(1
)
kt
S
P
i
=
+
(The amount at the end of an investment when an amount
P
is allowed to grow.)
7.
Present Value
of an Investment:
(1
)
kt
P
S
i

=
+
(The amount that must be invested now to provide for a future value.)
8.
Effective Rate of Interest
:
(1
)
1
k
E
i
=
+

(The effective rate for an account.)
9.
Future Value
of an Annuity:
(1
)
1
kt
i
S
R
i
+

=
(The amount at the end for an ordinary annuity with regular payments.)
1)
George can invest in an account paying an annual interest rate of 12 ½ %
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This document was uploaded on 01/19/2012.
 Summer '09
 Formulas

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