3 7 3 7 FUTURE VALUE OF INVESTMENTS

3 -7 3. 7 FUTURE VALUE OF INVESTMENTS OBJECTIVES Calculate the future value of a periodic deposit investment. Graph the future value function. Interpret the graph of the future value function. Slide 1

Key Terms • • future value of a single deposit investment periodic investment biweekly future value of a periodic deposit investment Slide 2

How can you effectively plan for the future balance in an account? • How can you calculate what the value of a deposit will be after a certain amount of time? • If you want your balance to be a specific amount at the end of a period of time, how do you determine how much your initial deposit and subsequent deposits should be? – Remember to consider the annual interest rate when considering your answer. Slide 3

Future value of a periodic deposit investment B = balance at end of investment period P = periodic deposit amount r = annual interest rate expressed as decimal n = number of times interest is compounded annually t = length of investment in years Slide 4

Example 1 • Slide 5

Example 2 • Slide 6

CHECK YOUR UNDERSTANDING • Slide 7

EXAMPLE 3 • Slide 8

EXAMPLE 4 • Slide 9

CHECK YOUR UNDERSTANDING Construct a graph for Rich and Laura’s situation in Example 1. Slide 10

More Realistic Investment • Slide 11