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your client’s investment until her expected
retirement in year 20.
retirement Reference (Example):
Worksheet: “page 79” 6 Annuities
• Series of equal periodic payments
– You give yourself a Christmas gift of $50
each year for the next five years
• Each year, you deposit that money on January
1 on a money market account, paying a fixed
• At the end of the 5th year, how much do you
have on the account?
7 Annuities – Note: This is an annuity due, as opposed to
an ordinary annuity
Worksheet: “page 80, bottom” 8 The FV function
– An easier way to get the Future Value of an
annuity (see also page 11)
annuity 9 Annuity Example
– Assume that you smoke a pack of
cigarettes per week, paying $4.50 per pack
– You are considering quitting, and investing
the money in the stock market instead
• Historical long-term average stock market in
the U.S. is about 12%
• How much money will you have in your
investment account after 10 years?
– (we are assuming a fixed price on cigarettes into the
future, no t...
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