UTPA STEM/CBI Courses/Business Math/Business Algebra/Future Value of an Annuity - Sinking Funds

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Course Title: Business Algebra

Lecture Topic: Future Value of an Annuity; Sinking Funds

Instructor: Charles A. Whitfield

Institution: TAMIU

Backwards Design[edit | edit source]

Course Objectives

  • Primary Objectives- By the next class period students will be able to:
    • Find the future value of an annuity;
    • Determine the payments needed to meet future obligations.

  • Sub Objectives- The objectives will require that students be able to:
    • Find the rate per period and the number of payment periods;
    • Find simple and compound interest.

  • Difficulties- Students may have difficulty:
    • Determining the rate per period as opposed to the annual interest rate.
    • Determining the number of payments as opposed to the number of years.
    • Using the graphing calculator for the exponents.
    • Using the graphing calculator with parenthesis in the correct place.

  • Real-World Contexts- There are many ways that students can use this material in the real-world, such as:
    • Solve real life application problems using the future value of an ordinary annuity and sinking fund payment formulas.

Model of Knowledge

  • Concept Map
    • Percent
    • Exponents
    • Graphing Calculator

  • Content Priorities
    • Enduring Understanding
      • Solving for the future value of an ordinary annuity.
      • Find the payment needed to reach a future value.
  • Important to Do and Know
    • Simple interest.
    • Compound interest.
  • Worth Being Familiar with
    • Present value of an annuity.
    • Amortization.

Assessment of Learning

  • Formative Assessment
    • In Class (groups)
      • Given a word problem, students will identify the periodic payment, the rate per period, and the number of payments (periods).
      • Substitute the information into the formula.
      • Solve the problem with a graphing calculator.
      • Compare answers within each group.
    • Homework (individual)
      • Assign problems from the textbook for homework.
  • Summative Assessment
    • In class exam over the lesson.

Legacy Cycle[edit | edit source]


By the next class period, students will be able to:

  • Find the future value of an annuity.
  • Determine the payments needed to meet future obligations.

The objectives will require that students be able to:

  • Identify or find the future value, periodic payment, rate per period, and number of payments.
  • Use a graphing calculator to enter the information correctly to obtain the correct answer.


You have had your first child and are concerned about paying for his/her college education. How much money do you need to invest each month to be able to pay for his/her college education 18 years from now?


How much does it cost now for a college education and how much will it cost in 18 years? What is the current rate of investment? What if you have another child in 3 years? What if the family has financial problems?


Lecture over formulas needed. Work in groups of 3-4. Bring in an investment person (guest speaker).


Go online to research current rates. Check tuition changes over the past several years. Research risks of various investments.


Assign problems on investments.


Students submit their findings.

Pre-Lesson Quiz[edit | edit source]

  1. question

Test Your Mettle Quiz[edit | edit source]

  1. question