Last time. . .
Principal: the initial amount invested.
Period: how often interest is paid.
Periodic rate: the interest received each period, as a
proportion of the balance.
Nominal [annual] rate, or A
Last time:
Loan repayments. Finding payments on a loan.
Total interest. (aka nance charge)
Amortisation. Breaking down repayments as an
amortisation schedule.
Amortisation formulas.
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Example: Amort
Last time
Annuities. Ordinary annuities, annuities due. Examples.
1 (1 + r)n
Present value. A = R
= Ran|r .
r
Generalised annuities. Directly; or in terms of ordinary
annuities.
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Example: Annuity
Last time, and since:
Annuitites due. Connections with ordinary annuities.
(1 + r)n 1
Future value. S = R
= Rsn|r .
r
Sinking funds.
Practice problems: None covered from Fri 16.
Exam dates. First mid
So far: Ch. 5
Compound interest. Nominal, periodic, effective interest
rates. Ordinary and continuous compounding.
Effect of time on value. Present and future values.
Timelines. Equations of value.
An
Last time: outline of row-reduction
1. Represent system of equations by augmented matrix (i.e. a
matrix and a vector together).
2. Use elementary row operations to put the matrix into
reduced form.
3.
Last time
Net Present Value. Comparing present values to
determine protability of an investment.
Continuous compounding. S = Pert .
Annuities. Example: pension plan.
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Example: Pension plan
Problem.