1. Copyright © 2008 Pearson Education Canada 12-1 Chapter 12 Ordinary General Annuities Contemporary Business Mathematics With Canadian Applications Eighth Edition S. A. Hummelbrunner/K. Suzanne Coombs PowerPoint: D. Johnston

2. Copyright © 2008 Pearson Education Canada 12-2 Objectives After completing chapter twelve, the student will be able to: Compute the future value (or accumulated value) for ordinary general annuities. Compute the present value (or discounted value) for ordinary general annuities. Compute the payment, number of periods, and interest rate for ordinary general annuities.

3. Copyright © 2008 Pearson Education Canada 12-3 General Annuity Length of interest conversion period is different from the length of the payment interval. In Canada, home mortgages are usually compounded semi-annually and payments are often made on a monthly, semi-monthly, or weekly basis.

4. Copyright © 2008 Pearson Education Canada 12-4 Ordinary General Annuity

5. Copyright © 2008 Pearson Education Canada 12-5 Relationship between Payment Interval and Interest Conversion Period

6. Copyright © 2008 Pearson Education Canada 12-6 Two Cases-Ordinary General Annuities

7. Copyright © 2008 Pearson Education Canada 12-7 Determining the value of c

8. Copyright © 2008 Pearson Education Canada 12-8 Effective Rate of Interest per Payment Period

9. Copyright © 2008 Pearson Education Canada 12-9 Calculating Effective Rate p

10. Copyright © 2008 Pearson Education Canada 12-10 Formula for the Future Value of an Ordinary General Annuity

11. Copyright © 2008 Pearson Education Canada 12-11 Finding FV or Accumulated Value

12. Copyright © 2008 Pearson Education Canada 12-12 Find the Future Value Using the Future Value Formula

13. Copyright © 2008 Pearson Education Canada 12-13 Electronic Calculator Solution

14. Copyright © 2008 Pearson Education Canada 12-14 Present Value of Ordinary General Annuity

15. Copyright © 2008 Pearson Education Canada 12-15 Finding PV of an Annuity

16. Copyright © 2008 Pearson Education Canada 12-16 Calculating PV

17. Copyright © 2008 Pearson Education Canada 12-17 Electronic Calculator Solution

18. Copyright © 2008 Pearson Education Canada 12-18 Using a Preprogrammed Calculator to Find PV or FV of an Ordinary General Annuity

19. Copyright © 2008 Pearson Education Canada 12-19 Finding PMT When the Future Value Is Known

20. Copyright © 2008 Pearson Education Canada 12-20 Find PMT Using the Electronic Calculator

21. Copyright © 2008 Pearson Education Canada 12-21 Finding PMT When Present Value Is Known

22. Copyright © 2008 Pearson Education Canada 12-22 Finding PMT on Electronic Calculator When PV Is Known

23. Copyright © 2008 Pearson Education Canada 12-23 Finding i

24. Copyright © 2008 Pearson Education Canada 12-24 Calculator solution (continued)

25. Copyright © 2008 Pearson Education Canada 12-25 Summary In an ordinary general annuity, the payment interval and interest conversion interval do not coincide.(i.e. General) It is necessary to calculate an equivalent rate of interest so that the payment interval and interest conversion interval do coincide.