Episode 18 — Finance Growth and Decay

Present Value Annuities

Learners will be able to:

• Calculate the present value of an annuity using the formula x / (i * (1 + i)^(-n)). • Determine the size of a loan that can be taken out, given a monthly payment and interest rate. • Solve for the payment per period in a loan, given the loan amount, interest rate, and number of payments. • Calculate the outstanding balance on a loan using the prospective method. • Derive the present value of an annuity formula from first principles.