Copyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side 1!anaging !oney4Copyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side 2Unit 4CSavings Plans and InvestmentsCopyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side "

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+ nnAnYAPR1APR1PMT) (A # accu$uated sa%ings pan &aanceP!' # reguar pay$ent (deposit) a$ount *P+ # annua percentage rate (as a deci$a)n # nu$&er o, pay$ent periods per yearY # nu$&er o, yearsSavings Plan Formula(Regular Payments)Copyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side 4ExampleUse the sa%ings pan ,or$ua to cacuate the &aance a,ter - $onths ,or an *P+ o, 12. and $onthy pay$ents o, /100.Copyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side 5Example (cont)Solution( )APRPMTAPRnYnAn 1 _ 1+ , 1 ] _ ,1 1 1 _ 1+ ,1 ] _ ,12 1 21 11212( 0 )0.12/1000.12( ) 1 1 ] 61 01 10 01./100. 615 20 / .Copyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side -Definitions*n annuity is any series o, e1ua, reguar pay$ents.*n ordinary annuity is a sa%ings pan in 2hich pay$ents are $ade at the end o, each $onth.*n annuity due is a pan in 2hich pay$ents are $ade at the &eginning o, each period.'he future value o, an annuity is the accu$uated a$ount at so$e ,uture date.'he present value o, a sa%ings pan is a u$p su$ deposit that 2oud gi%e the sa$e end resut as reguar pay$ents into the pan.Copyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side 3Example4ou 2oud i5e to retire 25 years ,ro$ no2 and ha%e a retire$ent ,und ,ro$ 2hich you can dra2 an inco$e o, /50,000 per year 6 ,ore%er7 8o2 can you do it9 *ssu$e a constant *P+ o, 3..:hat &aance do you need to earn /50,000 ,ro$ interest9 Since 2e are assu$ing an *P+ o, 3., the /50,000 $ust &e 3. # 0.03 o, the tota &aance.Solution 50 000714 2860 07/ ,tota &aance / ,.Copyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side 8Example (cont)In other 2ords, a &aance o, a&out /315,000 ao2s you to 2ithdra2 /50,000 per year 2ithout e%er reducing the principe.;etpect to recei%e this year9Copyright 2015, 2011, 2008 Pearson Education, Inc. Chapter 4, Unit C,Side 22Example (cont)Solutiona. *s sho2n at the top o, the 1uote, !icroso,t