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Annuities

Annuities. DO NOW…. Peggy Mays deposits $100 in an ordinary annuity at the end of each month in an account earning 6 percent interest compounded monthly. What is the future value of the account in 6 months?. Use the Compound Interest Amount of $1.00 Table on page 38. . DO NOW….

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Annuities

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  1. Annuities

  2. DO NOW… Peggy Mays deposits $100 in an ordinary annuity at the end of each month in an account earning 6 percent interest compounded monthly. What is the future value of the account in 6 months? Use the Compound Interest Amount of $1.00 Table on page 38.

  3. DO NOW… Step 1Find the Total number of periods. Periods per year X Number of years 12 X .5 = 6 • Step 2 Find the interest rate per period Interest Rate / # of periods per year • 6% = .50%12 $100 X 6.07550 = $607.55

  4. Annuity Due Step 1Find the Total number of periods. Periods per year X Number of years 4 X 2 = 8 Leah Troeller deposits $ 400 in an Individual Retirement Account in the form of an annuity due at the beginning of each quarter. The Account earns 8 percent interest compounded quarterly. What is the future value of the account in 2 years • Step 2 Find the interest rate per period Interest Rate / # of periods per year • 8% = 2.00%4 Step 3. $400.00 X 8.58297 = $3,433.19 Step 4. Use the calculation for future value of an annuity due.Ordinary Annuity X ($1.00 + Rate Per Period) $3,433.19 X 1.02 = $3,501.85

  5. Lets Review t 9

  6. Mark is in the landscaping business , has checks for $50.00 and $35.00. He also has two 50 dollar bills. He would like to receive $25.00 in cash and deposit the rest of the money in his savings account. What is the total deposit

  7. You Receive your bank statement from the bank. It shows a previous balance of $1078.55. You receive $10.15 in interest. You made deposits of $65.00, $232.55, and $67.90. No Withdrawal were made. What is your new Balance

  8. Anthony deposits $950.00 in a savings account. The account pays an annual interest rate of 6 percent. No other deposits were made. After 4 Months, the interest is calculated. How much Simple Interest did Anthony earn?

  9. Author deposited $2,900 in a new regular savings account that earns 5.5% interest compounded semiannually. No other deposits were made or withdrawals. What is the compound interest?

  10. Brooklyn National pays 6 percent interest compounded quarterly on regular savings account. You deposited $1,200 for 2 years. How much interest did you earn during the 2 years? Use the Chart below

  11. Lets say you deposit $8,000 in an account that pays 5.5 percent interest compounded daily. According to the table below, how much interest will you earn in 21 days

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