Lessons
Annuities
Topics:
Part 1 Future value of an annuity using Excel
Use Excel to create a spreadsheet as follows:
A  B  C  D  E  

1  Future value of an annuity  
2  Contribution:  $1000  per month  
3  Annual rate:  5%  Monthly rate:  =B3/12 

4  Period  Present Value (PV)  Interest (I)  Contribution (C)  P+I+C 
5  1  $0  =B5*$D$3 
=$B$2 
=B5+C5+D5 
6 
Fill row 5 down for 24 periods.
Use this spreadsheet to complete Exercise 7B, Question 11 a, c, e ...
Part 2 Annuity calculator
Use this Annuity Calculator to complete Exercise 7B, Question 2.
Check your answers.
Part 3 Loan repayment calculator
Using the Loan Repayment Calculator, investigate the following:
For a loan of $500 000,
 How much interest is payable on this loan, with a monthly payment frequency for an interest rate of 3.5%?
 How much less interest is payable if the payment frequency is fortnightly?
Part 4 Extra Repayments Calculator
Using the Extra Repayments Calculator, investigate the following:
Set the loan amount to $500 000, the payment frequency to monthly and the interest rate to 3.5%.
Set the extra contribution to $500 to start after 5 years.
How much interest is saved? How much time is saved off the length of the loan?
What extra contribution is required to reduce the loan length by 10 years?