Ch6.3  Maturity Value

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Finance
Simple Interest

Slide 1  Simple Interest – Lesson 3Maturity Value
 Rob Sorensen
 © Copyright 2015. All rights reserved.

Slide 2  Maturity Value
 When a loan or investment reaches the end of its term, we say that it matures.
 The maturity value (also called the future value) is the total of both the original principal plus the interest due on the maturity date.
 We’ll use the letter S for maturity.
 Rob Sorensen
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Slide 3  Maturity Value Formula
 The basic formula for the maturity value is:
 We know that I=Prt, so we can rewrite the formula as:
 We can then rearrange terms as follows:
 Rob Sorensen
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Slide 4  Example – Maturity
 Find the future value (maturity) of a $500 investment earning 4%p.a. for 146 days.
 Rob Sorensen
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Slide 5  Rob Sorensen
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 Try It Out!
 What will be the maturity value of $2,500 invested at 4.25% p.a. from June 3, 2016 to August 16, 2016?

Slide 6  Success Strategies
 Take your time reading questions.
 Write down everything that is given to you in the question as well as the unknown that you are trying to find.
 Make sure that you are working in consistent units – i.e. if the rate is annual, you must convert your time to years.
 Use all decimals during calculations – only round your final answer.
 Learn how to use the DATE functions on your calculator.
 Rob Sorensen
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