Education Technology

Future Value of an Ordinary Annuity & Sinking Funds

Published on 06/09/2008

Activity Overview

In this activity, students carry out financial computations, involving annuity, and the future value of annuities. Students also deal with computations involving sinking funds.

Before the Activity

  • Select TVM Solver from the calculator menu
  • See the attached activity PDF file for detailed instructions for this activity
  • Print page 17-19 from the attached PDF file for your class
  • During the Activity

    Distribute the pages to the class.

    Follow the Activity procedures:

  • Calculate the future value of an annuity using N, I%, PV, PMT, P/Y, and C/Y values
  • Calculate the monthly payments to be made to generate a specified future yield using N, I%, PV, FV, P/Y, and C/Y values
  • Calculate the future value of deposits made quarterly using N, I% (compounded quarterly), PV, PMT, P/Y, and C/Y values
  • Calculate the amount accumulated in a sinking fund that earns interest compounded monthly
  • Calculate the monthly payments to be made into a sinking fund to accumulate a specific value in a certain period of time
  • After the Activity

    Review student results:

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