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Annuities!!!! (1 Viewer)

xandersnape

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Anyone know a way of remembering what type of questions each of the three equations in annuities apply to?
 

PC

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Practice!

Seriously though,
1. FV formula - use when question talks about stuff like what will the investment grow to after 20 years, or in 20 years time, or something like that.
2. little PV formula - it's just the reverse of the compound interest formula - use when the question says something like what single amount of money would need to be invested now so it will grow to a certain amount.
3. big PV formula - ALWAYS used for LOANS, and N is the amount of the loan - also used when the question says something like what single amount of money would need to be invested now INSTEAD of investing a certain amount each month or year or whatever.

That's about it I think.
 

Tulii

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I used to have some trouble determining which formula went with each question.
So first, I got white labels (size of a palm card) and stuck them on my desk. I wrote the the little and big present value formula on two and the future on the last.

Then, I photo copied a bunch of annuities questions and cut them out.

and then, you have to match the questions up to the correct formula. After a while you understand it alot better and take note of key words that will help you in an exam.

So Yup.
 

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