ANNUITY COMPUTATION BY DR. PETER SHENKIN
AN ANNUITY IS ANY SET OF EQUAL PAYMENTS MADE AT
EQUAL INTERVALS OF TIME. WITH AN ORDINARY ANNUITY
PAYMENTS ARE MADE AT THE ENDS OF THE PERIODS DE-
FINED BY THESE TIME INTERVALS. FOR AN ANNUITY DUE
THE PAYMENTS ARE MADE AT THE BEGINNING OF THE PER-
IODS IN QUESTION. THE PRESENT VALUE OF AN ANNUITY
IS THE AMOUNT OF CASH ONE WOULD ACCEPT NOW INSTEAD
OF THE SEQUENCE OF FUTURE PAYMENTS. BECAUSE MONEY
HAS TIME VALUE (INTEREST IS CHARGED) THE PRESENT
VALUE DOES NOT EQUAL THE SUM OF THE PAYMENTS. tHE
FUTURE VALUE OF AN ANNUITY IS THE AMOUNT OF CASH
WHICH WOULD ACCUMULATE BY THE END OF THE ANNUITY
IF THE INDIVIDUAL PAYMENTS ARE INVESTED AT THE
PREVAILING INTEREST RATE.
PRESS ENTER TO CONTINUE?
MANY ANNUITIES ALSO INVOLVE A LAST BALLOON PAY-
MENT.IN THE ANNUITY PROBLEMS WE EXAMINE,THE VARIABLES
OF INTEREST ARE NUMBER OF PAYMENTS,INTEREST RATE PER
PERIOD,PAYMENT PER PERIOD,PRESENT OR FUTURE VALUE,AND
BALLOON PAYMENT (AT END OF TERM) IF DESIRED.GIVEN ANY
FOUR VALUES OF THE ABOVE VARIABLES THIS PROGRAM WILL
FIND THE FIFTH VARIABLE WHEN CONSIDERING THE PRESENT
VALUE SITUATION. IN THE FUTURE VALUE CASE NO BALLOON
PAYMENTS ARE CONSIDERED AS IN THIS CASE A BALLOON
PAYMENT OF A CERTAIN AMOUNT WOULD ADD THAT AMOUNT
TO FUTURE VALUE.NOTE THAT INTEREST RATES ARE WRITTEN
AS PER CENTS, NOT AS DECIMALS(E.G. 6%, NOT .06). IN
ADDITION NOTE THAT INTEREST RATE IS PER PERIOD,I.E.
PER MONTH,PER YEAR,ETC.
PRESS ENTER TO BEGIN?
SELECT TYPE OF PROBLEM DESIRED.
0.QUIT
1.ORDINARY ANNUITY-FUTURE VALUE(SINKING FUND)
2.ANNUITY DUE-FUTURE VALUE
3.ORDINARY ANNUITY-PRESENT VALUE
4.ANNUITY DUE-PRESENT VALUE
MAKE YOUR CHOICE? 1
IS INTEREST RATE QUOTED PER PERIOD(P) OR ANNUALLY(A)? A
NUMBER OF PAYMENTS PER YEAR? 12
ENTER EACH OF THE FOLLOWING.FOR THE UNKNOWN VALUE
ENTER 9999.
FUTURE VALUE ? 2345.67
PAYMENT ? 89.01
NUMBER OF PAYMENTS ? 12
ANNUAL INTEREST RATE ? 3.75
FUTURE VALUE = 2345.67
NUMBER OF PAYMENTS = 12
CONSISTING OF 12 PAYMENTS ANNUALLY.
ANNUAL INTEREST RATE = 3.75
PAYMENT = 89.01
PRESS ENTER FOR MORE?
SELECT TYPE OF PROBLEM DESIRED.
0.QUIT
1.ORDINARY ANNUITY-FUTURE VALUE(SINKING FUND)
2.ANNUITY DUE-FUTURE VALUE
3.ORDINARY ANNUITY-PRESENT VALUE
4.ANNUITY DUE-PRESENT VALUE
MAKE YOUR CHOICE? 2
IS INTEREST RATE QUOTED PER PERIOD(P) OR ANNUALLY(A)? P
ENTER EACH OF THE FOLLOWING.FOR THE UNKNOWN VALUE
ENTER 9999.
FUTURE VALUE ? 1234.56
PAYMENT ? 89.01
NUMBER OF PAYMENTS ? 36
INTEREST RATE PER PERIOD(%)? 0.175
FUTURE VALUE = 1234.56
NUMBER OF PAYMENTS = 36
INT. RATE PER PERIOD= .175
PAYMENT = 89.01
PRESS ENTER FOR MORE?
SELECT TYPE OF PROBLEM DESIRED.
0.QUIT
1.ORDINARY ANNUITY-FUTURE VALUE(SINKING FUND)
2.ANNUITY DUE-FUTURE VALUE
3.ORDINARY ANNUITY-PRESENT VALUE
4.ANNUITY DUE-PRESENT VALUE
MAKE YOUR CHOICE? 3
IS INTEREST RATE QUOTED PER PERIOD(P) OR ANNUALLY(A)? A
NUMBER OF PAYMENTS PER YEAR? 24
ENTER EACH OF THE FOLLOWING.FOR THE UNKNOWN VALUE
ENTER 9999.
PRESENT VALUE ? 1234.56
PAYMENT ? 89.01
NUMBER OF PAYMENTS ? 52
ANNUAL INTEREST RATE ? 3.25
BALLOON PAYMENT ? 9999
PRESENT VALUE = 1234.56
NUMBER OF PAYMENTS = 52
CONSISTING OF 24 PAYMENTS ANNUALLY.
ANNUAL INTEREST RATE = 3.25
PAYMENT = 89.01
BALLOON PAYMENT =-3467.45
PRESS ENTER FOR MORE?
SELECT TYPE OF PROBLEM DESIRED.
0.QUIT
1.ORDINARY ANNUITY-FUTURE VALUE(SINKING FUND)
2.ANNUITY DUE-FUTURE VALUE
3.ORDINARY ANNUITY-PRESENT VALUE
4.ANNUITY DUE-PRESENT VALUE
MAKE YOUR CHOICE? 4
IS INTEREST RATE QUOTED PER PERIOD(P) OR ANNUALLY(A)? P
ENTER EACH OF THE FOLLOWING.FOR THE UNKNOWN VALUE
ENTER 9999.
PRESENT VALUE ? 1234.56
PAYMENT ? 9999
NUMBER OF PAYMENTS ? 36
INTEREST RATE PER PERIOD(%)? 5
BALLOON PAYMENT ? 55.55
PRESENT VALUE = 1234.56
NUMBER OF PAYMENTS = 36
INT. RATE PER PERIOD= 5
PAYMENT = 70.5051
BALLOON PAYMENT = 55.55
PRESS ENTER FOR MORE?
SELECT TYPE OF PROBLEM DESIRED.
0.QUIT
1.ORDINARY ANNUITY-FUTURE VALUE(SINKING FUND)
2.ANNUITY DUE-FUTURE VALUE
3.ORDINARY ANNUITY-PRESENT VALUE
4.ANNUITY DUE-PRESENT VALUE
MAKE YOUR CHOICE? 0