1. Lesson #7: Regular Annuities- Present Value
June 9th, 2011

2. PV – Present Value
R – payment
i – interest rate per compounding period
n – number of compounding periods of total number of payments
The present value is the amount of money invested or borrowed today.

3. EX1: Meagan just bought a car. Her monthly payments are $327. 50
EX1: Meagan just bought a car. Her monthly payments are $ If Meagan financed her car through the dealership at 4.5%/a compounded monthly over 3 years, what was the cost of the car and how much interest does Meagan end up paying on the loan?
PV=? R= i = n =

5. Interest = Total payments - actual amount
I = (R) (n) – PV = =

6. EX 2: Ben has sold his restaurant business and plans to retire
EX 2: Ben has sold his restaurant business and plans to retire. He wants to invest enough money from the sale in order to receive a payment of$8000 a month for the next 20 years. If Ben can invest his money at a rate of 5.4%/a compounded monthly, how much should he invest?
PV = ? R= 8000 i = n =

8. EX 3:
How much will Ben earn in interest by investing his money?