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Present Value and Loans Mat 112

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Now, let’s withdraw

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Withdraw from a “present value”

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Paying off a Loan

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How long does the money last?

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Quarterly Withdrawals

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Present Value

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Another sum of exponentials We use the same “sum of a series” technique, as we used for FV, and arrive at:

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2 Versions of the PV formula

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Examples for Present Value Mat 112

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Compute PV

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How much interest?

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Compute PMT

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Setup, and compute... PMT = $ 846.09

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Example:

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Try Another

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Car Payments

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Purchase Price?

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A Bigger Loan If you plan to buy a house and finance $90,000 with a 30-year loan charging 6.6% compounded monthly, what is the size of your monthly payment? Here n = 12(30) = 360 payments. Over the 30 years, what is the total of your monthly payments?

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