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Solving Annuity Problems as Geometric Series

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Geometric Series

In a previous lesson, geometric series were introduced.

 

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Lesson Goals

  • Identify different types of annuities.
  • Design spreadsheets, including amortization tables, to calculate the balance of an annuity.
  • Solve for the future value and present value of an annuity using the geometric series formula.
  • Derive formulas for the future value and present value of an ordinary simple annuity using the geometric series formula.
  • Apply the formulas for the future value and present value of an ordinary simple annuity to solve annuity problems.

Try This

At the end of every year, Ronin deposits \($1500\) into an account that pays \(4.8\%\) per year compounded annually. If the starting balance was zero, determine the balance in the account at the end of the \(8\)th year.