Videos: Introduction to Annuities
What is an Annuity?
- You decide to begin a savings plan. Starting in one year you will deposit $100 each year into an account that pays j1= 12%. How much will you have in 3 years? How much of that is interest?
- Financial planners estimate you will require an income of $2,500 per month to retire. You dial 1-800-psychic and discover you will live another 15 years. How much money will you need to retire if your first withdrawal will be in one month? (interest is 9% compounded monthly)
- You have just purchased a new house for $250,000. You can afford to pay $2,600 per month on your mortgage. How long will it take you to pay off your house if interest is calculated at 12% compounded monthly?
- Your new car loan has payments of $499 at the end of each month for 5 years to pay for a $25,000 Mercury Stable. What rate of interest is being charged? What is the effective rate? What is the cost of financing?
Chapter Attribution
Video chapter in Business Mathematics by Chris Kellman, Leslie Major, Don Mallory, Frank Gruen, and Amy Goldlist shared under a CC BY-NC license.
