For an Annuity Immediate:
Payment = 1
n = 7
Interest Rate = 3
Calculate Present Value, Accumulated Value
PV annuity immediate formula:
an|i = | Payment * (1 - vn) |
| i |
Calculate v:
v = 0.97087378640777
Calculate PV given i = 0.03, n = 7, and v = 0.97087378640777
a7|0.03 = | 1 * (1 - 0.970873786407777) |
| 0.03 |
a7|0.03 = | 1 * (1 - 0.81309151134335) |
| 0.03 |
a7|0.03 = | 1 * 0.18690848865665 |
| 0.03 |
a7|0.03 = | 0.18690848865665 |
| 0.03 |
a
7|0.03 =
6.2303AV annuity immediate formula:
sn|i = | Payment * ((1 + i)n - 1) |
| i |
Calculate AV given i = 0.03, n = 7
s7|0.03 = | 1 * ((1 + 0.03)7 - 1) |
| 0.03 |
s7|0.03 = | 1 * (1.037 - 1) |
| 0.03 |
s7|0.03 = | 1 * (1.2298738654249 - 1) |
| 0.03 |
s7|0.03 = | 1 * 0.22987386542487 |
| 0.03 |
s7|0.03 = | 0.22987386542487 |
| 0.03 |
s
7|0.03 =
7.6625How much of AV is principal?:
Principal = Payment Amount * n
Principal = 1 * 7
Principal =
7Calculate Interest Paid:
Interest Paid = Accumulated Value - Principal
Interest Paid = 7.6625 - 7