Education Technology

Present Value of an Ordinary Annuity

Activity Overview

In this activity, students carry out financial computations to find out how much money should be deposited today so that a fixed amount can be drawn at regular intervals. These calculations involve determination of the present value of annuity.

Before the Activity

  • Select TVM Solver or tvm_PV function on the calculator menu
  • See the attached activity PDF file for detailed instructions for this activity
  • Print pages 20-21 from the attached PDF file for your class
  • During the Activity

    Distribute the pages to the class.

    Follow the Activity procedures:

  • Calculate the amount to be invested today that allows a specified monthly payment using N, I%, FV, PMT, P/Y, and C/Y values
  • Find the cash price given the down payment, monthly payment, and finance charges compounded monthly
  • After the Activity

    Review student results:

  • As a class, discuss questions that appeared to be more challenging
  • Re-teach concepts as necessary