2. Overview:-
• Annuity
• Future value of annuity
• Present value of annuity
• Perpetuity and Present value of Perpetuity
• Loan Amortization
• Complex Applications
3. Annuity and FV of annuity
• Formula for PV and FV of annuity are given in
the pages start with the given example than
solve this sums:-
• Compute FV of an Ordinary annuity that pays
Rs. 5000 per year for 3 years and earns a
return of 12%.
• Answer:- Rs. 16,872
(compute the example given and above example first
with formula and after with calci)
4. FV of annuity
• Previous example was of ordinary annuity
and now its of Annuity Due.
• first compute the example is given in the
page and than try this sum.
• Compute FV of an annuity due that pays Rs.
6000 per years for 4 years and earn a return
of 12.5%.
• Answer:- 32,497.558
(compute the example given and above
example first with formula and after with calci)
5. Remember this:-
• To compute FV of due annuity calci should be in
Beginning mode
key for Beginning: 2nd +BGN(PMT button)+
2nd+SET.
(hit the same buttons to set the calci in END
mode)
• PMT’s sigh must be negative.
• For more practice you can compute FV by taking
“N” semi annually, quarterly, monthly & daily.
6. PV of Annuity
• Formula is given in the pages and practice the
examples and than try to solve following sums
with formula and calci.
• Compute PV of an Ordinary annuity that pays Rs.
2000 per years for 6 years and earn a return of
8%.
• Answer:- 9,245.759
• Compute PV of an Annuity Due that pays Rs. 1500
per years for 7 years and earn a return of 7%.
• Answer:-8,649.809 (answer will come if only the
calci will be in Beginning mode)
7. Perpetuity
• Annuity and Perpetuity are almost one and
the same, both provide the fixed amount of
cashflow at equal interval.
• The major difference between annuity and
perpetuity, Perpetuity pays for an infinite
period.
• This things has illustrated pages given to us.
8. Loan Amortization
• A new example similar to the sum in slide no.
47.
• Mr. B is planning to borrow Rs. 25,000 for 8
years with an interest rate of 10%. Compute
the amount of Loan installment and prepare
Amortization schedule.
10. Some other sums that sir give us o
solve from QUESTION BANK.
• Question no. :- 5.1
• Question no. :- 5.5
• Question no. :- 6.24
• Question no. :- 6.1
• Question no. :- 6.8