Millionaire's Son Wins $107 Million Jackpot - Sacramento News Story - KCRA Sacramento

Millionaire's Son Wins $107 Million Jackpot - Sacramento News Story - KCRA Sacramento

Read page 810-811 in your book for an explanation of how annuities work.

Let's assume this guy chose the annuity instead of the lump sum.  Based on the 107 million dollars he was promised, what would be this guy's annual payments (before taxes) be if he were to receive equal  payments for 25 year installments rather than a lump sum?

Based on ordinary annuity principles, what would be the present value of the annuity after one payment was made?

Let's assume the in the annuity situation, instead of the lotto administration buying an annuity, the State buys U.S. securities paying an interest rate 7%.  How much would the winner have received in cash instead of the original $107 million jackpot?

Discrete Math Borrowing Assignment

Please use the following link to complete the assignment.  This assignment should be done on Googledocs with a partner. Just make statements about what you did and found out for each number in the assignment.  Title the borrowing document:  Name Borrowing Assignment

https://docs.google.com/leaf?id=0BzAgKqsf1_OcODg0ODNmYmYtMTQ2My00MzUzLTljYzEtNTYwNDY4OGEwZGY3&hl=en_US

Home Mortgage Assignment

Due 10/3

Visit the link below for questions.  Create your own googledoc titled Name Home Mortgage Assignment and share with paideiamath.  Good Luck.



https://docs.google.com/document/d/1SF_4r8ipqjXlOs-3di8Cy3vNcXhHxNdPR4ldFEG9JF0/edit?hl=en_US

Scribe Post - 22.1-22.4

*This Scribe Post covers everything we learned last week (Sept 16th - 21st)


22.1

Bonds:
- Bonds always pay simple interest! A=P(1-rt)
- The Principal plus Interest is paid at the end of the maturity of the bond
*All risk goes to the buyer
- Inflation? Will the bond issuer be able to pay?

Need help understanding bonds? Check out this video!!




Add-On Loans:
- What is an Add-On loan?
An Add-On loan is a loan in which you, the borrower, pays back the Principal amount plus the Interest over a fixed period of time.
- Always use Simple Interest when working with add on loans!
- Formula for Add on Loans:
d = P(1+rt)/n
d = payment per interval

Discounted Loans:
- What is a Discounted loan?
A Discounted loan is a loan in which you, the borrower, pay interest upfront, and then eventually pay back the principal over time. In other words, I may want to borrow $100 with 6% interest; the lender would only hand me $94, which I would pay back over time ($94 = 6% of $100). Since I paid my interest up front ($6) I only receive the remaining principal ($94).
- Always use Simple Interest when working with Discounted Loans!
- To find the discounted loan:
1) find interest added onto original Principal
2) subtract interest from original Principal
= this will give you how much you are "handed" the day you get the loan
3) then divide this number by the number of payments you will be making


22.2 - 22.3

Credit Card Payments:
- Always use Compound Interest when working with Credit Card Payments
A = (P+i)^n
- Also know Savings Formula when working with Credit Card Payments
A = d[((1+i)^n-1) / n]


22.4

Amortizing:
- Formula:
A = d[ (1-(1+i)^-n) / n]
This formula is used when you need to find out how much to pay at each interval for a house that costs $x with y% interest over z years.

How to find APY:
- APY = i(n)
i = rate per compounding period
n = number of times compounded


Things to know:
- The definition of "bond"
- Simple Interest Formula & how and where to apply it
- Compound Interest formula & how and where to apply it
- The definition of "Add-On loan"
- The definition of "Discounted loan"
- The formula for amortizing (loan on a house)
- How to find APY

How To Solve For d, Payments Per Interval in Loan Amortization

Today in class we worked our way through using of a couple of familiar equations to derive the conventional loan payment equation. 

If we replace (P), the principal, on a loan with (A), the present value of an annuity or amount being amortized, then we know

A(1+i)^n = d [((1+i)^n - 1)/i]      which after algebra reflects   A = d[(1-(1+i)^-n)/i]

If you continue with algebra operations to solve for d using the above equation you get

d = Ai/(1-(1+i)^-n)

Discounted Loan help

this is for anyone who was still a little confused as to what a discounted loan is.

http://www.investorglossary.com/discount-loan.htm

Test Aftermath Instructions

Reflect on your performance mathematically (do not talk about non-math related things like sleep, breakfast, or study skills). Talk about math!


(1 point)
1. Offer specific examples of some areas you did well on the test (use math terms to describe, not numbers of problems from the test.)


(2 point)
2. Offer specific examples of some areas you did poorly on the test (use math terms to describe, not numbers of problems from the test.) Tell specifics about the problem that caught you up...(wording, computation, comprehension, etc.)


(3 points)
3. Select one problem you got wrong. Show me that you understand the problem by doing another problem like it correctly.  This can be one problem from the test, as long as I did not write the answer during corrections.  Please avoid correcting small errors.


(3 points)
4.    Select a topic that was NOT covered on the test, but was covered in class or the book. Show me you understand it by working a pr

Gil CPI Review

The Basic CPI (Consumer Price Index) formula is:

(New Price/Old Price)=(CPI New/CPI Old)

That is the simplest form of the equation. Another one is:

New Price=Old Price + (cpi of event A / cpi of event B)
This is useful when trying to find a different part of the equation.

Here is an Example Problem: Let's say that you own a TV, purchased in 2004. You purchase this fine piece of technology for $999.

Lets say that you want to sell it now, and the year is 2011. You want to know how much the tv would be worth now had you bought in 2011. Basically, you want to know how much money you really spent on it, by seeing how much money you spent in constant dollars.

To do this, you do: 999(ww5.922/188.9)= $1,109.87 which is how much you would have spent had you bought that tv this year.

So why not use Compound interest to find this?



The answer is, because compound interest is for constant growth, whereas inflation isn't constant. CPI gives nominal value rather than assuming.







I Choose You, Miranda (next scribe)!!!!

Eli: 21.9 CPI

Inflation fluctuates. It is very unstable, and changes very frequently. The government came up with a system to calculate the changes in value, called the CPI (consumer price index.) This is to figure out the cost of the necessities of living – food, clothes, cars, electronics, etc. This system allows us to compare dollars from one year to another, in a way that shows us the constant dollar. Ten dollars now does not mean the same exact thing as 5 dollars 10 years ago. What we learned in class is to calculate what an item or amount of money is worth in a certain number of years in today’s worth. The CPI allows us to calculate what values were in the past.

Cost Year A/Cost Year B = CPI Year A/CPI Year B. This is long version of the equation. The shorter version that most people use, and is most useful is this:

Recent Dollars = Old Dollars (CPI of recent year/CPI of old year)

The government has calculated the CPI rates for us, and we can see that in the early 1900s, the CPI was in the tens, and the CPI today is about 218. There was a dramatic increase.

The government bureau that created all of these numbers is the Labor Statistics Bureau.

Below is the table showing the CPI that the LSB came up with:

Year Annual Average Annual Percent Change (rate of inflation) 1913 9.9 1914 10.0 1.3% 1915 10.1 0.9% 1916 10.9 7.7% 1917 12.8 17.8% 1918 15.0 17.3% 1919 17.3 15.2% 1920 20.0 15.6% 1921 17.9 -10.9% 1922 16.8 -6.2% 1923 17.1 1.8% 1924 17.1 0.4% 1925 17.5 2.4% 1926 17.7 0.9% 1927 17.4 -1.9% 1928 17.2 -1.2% 1929 17.2 0.0% 1930 16.7 -2.7% 1931 15.2 -8.9% 1932 13.6 -10.3% 1933 12.9 -5.2% 1934 13.4 3.5% 1935 13.7 2.6% 1936 13.9 1.0% 1937 14.4 3.7% 1938 14.1 -2.0% 1939 13.9 -1.3% 1940 14.0 0.7% 1941 14.7 5.1% 1942 16.3 10.9% 1943 17.3 6.0% 1944 17.6 1.6% 1945 18.0 2.3% 1946 19.5 8.5% 1947 22.3 14.4% 1948 24.0 7.7% 1949 23.8 -1.0% 1950 24.1 1.1% 1951 26.0 7.9% 1952 26.6 2.3% 1953 26.8 0.8% 1954 26.9 0.4% 1955 26.8 -0.3% 1956 27.2 1.5% 1957 28.1 3.4% 1958 28.9 2.7% 1959 29.2 0.9% 1960 29.6 1.5% 1961 29.9 1.1% 1962 30.3 1.2% 1963 30.6 1.3% 1964 31.0 1.3% 1965 31.5 1.6% 1966 32.5 3.0% 1967 33.4 2.8% 1968 34.8 4.2% 1969 36.7 5.4% 1970 38.8 5.9% 1971 40.5 4.2% 1972 41.8 3.3% 1973 44.4 6.3% 1974 49.3 11.0% 1975 53.8 9.1% 1976 56.9 5.8% 1977 60.6 6.5% 1978 65.2 7.6% 1979 72.6 11.3% 1980 82.4 13.5% 1981 90.9 10.4% 1982 96.5 6.2% 1983 99.6 3.2% 1984 103.9 4.4% 1985 107.6 3.5% 1986 109.7 1.9% 1987 113.6 3.6% 1988 118.3 4.1% 1989 123.9 4.8% 1990 130.7 5.4% 1991 136.2 4.2% 1992 140.3 3.0% 1993 144.5 3.0% 1994 148.2 2.6% 1995 152.4 2.8% 1996 156.9 2.9% 1997 160.5 2.3% 1998 163.0 1.5% 1999 166.6 2.2% 2000 172.2 3.4% 2001 177.0 2.8% 2002 179.9 1.6% 2003 184.0 2.3% 2004 188.9 2.7% 2005 195.3 3.4% 2006 201.6 3.2% 2007 207.3 2.8% 2008 215.2 3.8% 2009 214.5 -0.3% 2010 218.1 1.6% 2011* 225.4 3.3%

Next scribe is Gil.