Mr Job's Maths Class

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 ...

Cambridge Year 12 Standard 2 Exercise 7B Question 11

Part 2 Annuity calculator

Use this Annuity Calculator to complete Exercise 7B, Question 2.
Check your answers.

Cambridge Year 12 Standard 2 Exercise 7 B Question 2

Part 3 Loan repayment calculator

Using the Loan Repayment Calculator, investigate the following:

For a loan of $500 000,

  1. How much interest is payable on this loan, with a monthly payment frequency for an interest rate of 3.5%?
  2. 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?




http://gomaths.net/5257 | show



Wolfram Alpha can do many maths questions.

Scientific Calculator