ANNUITIES
–
ORDINARY,
DUE,
FUTURE
VALUE,
PRESENT
VALUE
Colin
C
Smith
2010
6
12.
Calculating
the
payment
(PMT)
for
a
normal
financial
transaction
‐
Annuity
Due
You
buy
a
new
car
today
for
R120
000
and
obtain
finance
for
80%
of
the
purchase
price
(R96,000)
over
four
years.
The
bank
quotes
you
a
finance
rate
of
12%
per
annum
(nominal
rate).
Instalments
are
payable
monthly
in
advance.
Calculate
the
monthly
instalment.
HP10BII
financial
calculator
KEYS
DISPLAY
*Must
display
BEGIN
C
ALL
0.00
BEG/END
BEGIN
0.00
1
P/YR
1.00
96,000
PV
96,0000.00
0
FV
0.00
12
÷
12
I/YR
1.00
4
x
12
N
48.00
PMT
‐
2503.02
You
can
also
solve
for
the
interest
rate
and
for
the
number
of
periods
using
the
same
functions.
13.
Calculating
the
interest
rate
for
a
normal
financial
transaction
‐
Annuity
Due
A
bank
offers
you
a
personal
loan
of
R20,000
repayable
in
24
easy
instalments
of
R1,050
per
month
starting
immediately.
What
nominal
interest
rate
(APR)
is
being
charged?
HP10BII
financial
calculator
KEYS
DISPLAY
*Must
display
BEGIN
C
ALL
0.00
BEG/END
BEGIN
0.00
1
P/YR
1.00
20,000
PV
20,0000.00
0
FV
0.00
1,050
+/
‐
PMT
‐
1050.00
24
N
24.00
I/YR
2.1237
X
12
25.48
Additional
notes:
Please
also
see
the
Bond
Valuation
section
for
similar
transactions.
Where
we
have
irregular
cash
flow
payments,
we
cannot
use
the
annuity
functionality
and
instead
can
use
the
NET
PRESENT
VALUE
and
INTERNAL
RATE
OF
RETURN
functions.
