lecture 19 ordinary annuities ana nora evans sean clark 403 kerchof [email protected] ans5k/...
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Lecture 19Ordinary Annuities
Ana Nora Evans Sean Clark403 [email protected]://people.virginia.edu/~ans5k/
Math 1140 Financial Mathematics
2Math 1140 - Financial Mathematics
Turn in your homework NOW!
Math 1140 - Financial Mathematics3
A) I am here and ready to go.
B) I am here, but I’ll take a nap.
C) I’m not here.
D) What about them Lions, 4 - 0!!!
E) Colts suck without Manning.
4Math 1140 - Financial Mathematics
Last time
Answered many questions about the grading.For more info check the class website:http://www.cs.virginia.edu/~evans/finmath/2011/grading-details
Solved some homework exercises.We learned about geometric series.
5Math 1140 - Financial Mathematics
Geometric Series
S = xn + xn-1 + … + x + 1xS – S = xn+1 + xn + … + x2 + x – (xn + xn-1 + … + x + 1)
xS – S = xn+1 - 1
1
11
x
xS
n
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1+3+32+…+39=
A) (39-3)/(3-1)
B) (39-1)/(3-1)
C) (310-3)/(3-1)
D) (310-1)/(3-1)
E) 39-1
The correct answer is D.
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32+…+39=
A) (39-3)/(3-1)
B) (39-1)/(3-1)
C) 32(38-3)/(3-1)
D) 32(39-3)/(3-1)
E) 32(37-3)/(3-1)
32+…+39
= 32(1+…+37)
=32(38-3)/(3-1)
1
11
x
xS
n
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Suppose that R dollars are deposited at equally spaced times in an account paying interest of i percent per time period, compounded once per period.
If n such deposits are made, then immediately after the nth deposit the account balance S is
i
iRS
n 1)1(
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Suppose that a professional wrestler makes 9 annual deposits of $5,000 into an account paying an effective rate of 8.6%. How much is in the account immediately after the last deposit is made?
Work in groups 3-4 minutes.
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Suppose that a professional wrestler makes 9 annual deposits of $5,000 into an account paying an effective rate of 8.6%. How much is in the account 23 years after the last deposit is made?
Work in groups 3-4 minutes.
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Jane plans to save up for a car by making equal monthly deposits into a savings account for three years. If the account pays a nominal rate of 5.2% convertible monthly and her goal is to have $20,000 immediately after the last deposit, how large must her deposits be?
Work in groups 5-6 minutes.
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i
iRS
n 1)1(
1)1(
ni
iSR
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Wednesday
Homework 6 due
Read sections 4.3 and 4.4
Project Teams due next Friday.
Charge