Perpetuities and future value of ordinary annuities
8 hours
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Use a recurrence relation to model the future value of an ordinary annuity, e.g. compound interest investment with periodic payments where interest is calculated before the periodic payment is made.
1 interactive
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+1 = + where +1 is total amount at the beginning of the (+ 1) th period, is total amount at the beginning of the th period, is periodic payment and = 1 + where is interest rate per compounding period
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Use the future value annuity formula to model the future value of an ordinary annuity, e.g. compound interest investment with periodic payments where interest is calculated before the periodic payment is made.
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Solve practical problems involving the future value of an ordinary annuity, including determining the total amount of the annuity, periodic payment, total payments and total interest.
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Use the perpetuity formula, = where is total amount, is periodic payment and is interest rate per compounding period.
1 interactive
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Solve practical problems involving perpetuities, including determining the total amount of the perpetuity, periodic payment and interest rate per compounding period.