Exercises

Key Skills

Annuities

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Exercises

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Practice exam-style annuities problems

Key Skills

Using TVM Solver (Calculator) - Annuities

SL Core 1.4

You should be able to use the TVM Solver on your calculator to perform calculations with annuities.

In IB, annuities are paid at the end of a number of periods (N) and have an annual interest rate (I%), an initial lump-sum deposit (PV), a fixed payment (PMT) and a future value (FV), which represents the total accumulated amount at the end of the term.

In the special case of annuities, payments and compounding occur can occur at different same frequencies (P/Y & C/Y).

Positive & Negative Cash Flows (TVM)

SL Core 1.4

Whenever you use the Finance App (TVM Solver) on your calculator, it's critical that you enter and interpret the signs correctly:

When you receive money from a bank or savings account, that value is positive, because you're gaining money.

When you send money to a bank, that value is negative, because you're losing money.

Using TVM Solver (Calculator) - Annuities

SL Core 1.4

You should be able to use the TVM Solver on your calculator to perform calculations with annuities.

In IB, annuities are paid at the end of a number of periods (N) and have an annual interest rate (I%), an initial lump-sum deposit (PV), a fixed payment (PMT) and a future value (FV), which represents the total accumulated amount at the end of the term.

In the special case of annuities, payments and compounding occur can occur at different same frequencies (P/Y & C/Y).

Positive & Negative Cash Flows (TVM)

SL Core 1.4

Whenever you use the Finance App (TVM Solver) on your calculator, it's critical that you enter and interpret the signs correctly:

When you receive money from a bank or savings account, that value is positive, because you're gaining money.

When you send money to a bank, that value is negative, because you're losing money.