{"id":4617,"date":"2023-06-16T02:09:26","date_gmt":"2023-06-16T02:09:26","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/?post_type=chapter&#038;p=4617"},"modified":"2025-08-27T00:39:09","modified_gmt":"2025-08-27T00:39:09","slug":"annuities-and-loans-apply-it-1","status":"web-only","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/chapter\/annuities-and-loans-apply-it-1\/","title":{"raw":"Annuities and Loans: Apply It 1","rendered":"Annuities and Loans: Apply It 1"},"content":{"raw":"<section class=\"textbox learningGoals\">\r\n<ul>\r\n\t<li>Calculate annuity balance, interest earned, and payout<\/li>\r\n\t<li>Calculate loan payments, balance, and interest using the loan formula<\/li>\r\n\t<li>Compare loans in real-world applications<\/li>\r\n<\/ul>\r\n<\/section>\r\n<h2>Building a Golden Future: Navigating Savings Annuities and Loans<\/h2>\r\n<p>Imagine you've finally reached the golden years of retirement. No more alarm clocks, no more meetings, just plenty of time to spend doing the things you love. We all dream of a comfortable retirement, with a savings cushion that lets us truly savor this time of our lives. But, how do we get there? Most often, we start building this cushion through retirement plans, most of which are examples of savings annuities.<\/p>\r\n<center>\r\n[caption id=\"attachment_6852\" align=\"aligncenter\" width=\"500\"]<img class=\"wp-image-6852\" src=\"https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-300x200.jpg\" alt=\"A man relaxing on a beach\" width=\"500\" height=\"333\" \/> Figure 1. Calculate your retirement funds[\/caption]\r\n<\/center>\r\n<p>&nbsp;<\/p>\r\n<p>Annuities might sound complicated but in reality, they are rather simple.<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9630[\/ohm2_question]<\/section>\r\n<p>Let's imagine a scenario: Your friend is [latex]24[\/latex] years old and decides to start an IRA with [latex]$50[\/latex] per month. The account anticipates a [latex]4.4\\%[\/latex] annual interest. They plan to keep this up for the next [latex]44[\/latex] years, until they reach the retirement age of [latex]68[\/latex].<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9631[\/ohm2_question]<\/section>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9632[\/ohm2_question]<\/section>\r\n<p>Not everyone's saving strategy is the same. For instance, you have another friend who feels [latex]44[\/latex] years is a very long time to be saving. They decide to increase their monthly contribution to [latex]$100[\/latex] but only save for [latex]22[\/latex] years (assume the same interest rate of [latex]4.4\\%[\/latex]). They believe this should result in the same amount of money at the end of the account time.<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question hide_question_numbers=1]9633[\/ohm2_question]<\/section>","rendered":"<section class=\"textbox learningGoals\">\n<ul>\n<li>Calculate annuity balance, interest earned, and payout<\/li>\n<li>Calculate loan payments, balance, and interest using the loan formula<\/li>\n<li>Compare loans in real-world applications<\/li>\n<\/ul>\n<\/section>\n<h2>Building a Golden Future: Navigating Savings Annuities and Loans<\/h2>\n<p>Imagine you&#8217;ve finally reached the golden years of retirement. No more alarm clocks, no more meetings, just plenty of time to spend doing the things you love. We all dream of a comfortable retirement, with a savings cushion that lets us truly savor this time of our lives. But, how do we get there? Most often, we start building this cushion through retirement plans, most of which are examples of savings annuities.<\/p>\n<div style=\"text-align: center;\">\n<figure id=\"attachment_6852\" aria-describedby=\"caption-attachment-6852\" style=\"width: 500px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-6852\" src=\"https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-300x200.jpg\" alt=\"A man relaxing on a beach\" width=\"500\" height=\"333\" srcset=\"https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-300x200.jpg 300w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-1024x683.jpg 1024w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-768x512.jpg 768w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-1536x1024.jpg 1536w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-2048x1366.jpg 2048w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-1200x800.jpg 1200w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-65x43.jpg 65w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-225x150.jpg 225w, https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/18\/2023\/06\/14155950\/pexels-huy-phan-1377070_50-350x233.jpg 350w\" sizes=\"(max-width: 500px) 100vw, 500px\" \/><figcaption id=\"caption-attachment-6852\" class=\"wp-caption-text\">Figure 1. Calculate your retirement funds<\/figcaption><\/figure>\n<\/div>\n<p>&nbsp;<\/p>\n<p>Annuities might sound complicated but in reality, they are rather simple.<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9630\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9630&theme=lumen&iframe_resize_id=ohm9630&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<p>Let&#8217;s imagine a scenario: Your friend is [latex]24[\/latex] years old and decides to start an IRA with [latex]$50[\/latex] per month. The account anticipates a [latex]4.4\\%[\/latex] annual interest. They plan to keep this up for the next [latex]44[\/latex] years, until they reach the retirement age of [latex]68[\/latex].<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9631\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9631&theme=lumen&iframe_resize_id=ohm9631&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9632\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9632&theme=lumen&iframe_resize_id=ohm9632&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<p>Not everyone&#8217;s saving strategy is the same. For instance, you have another friend who feels [latex]44[\/latex] years is a very long time to be saving. They decide to increase their monthly contribution to [latex]$100[\/latex] but only save for [latex]22[\/latex] years (assume the same interest rate of [latex]4.4\\%[\/latex]). They believe this should result in the same amount of money at the end of the account time.<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm9633\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=9633&theme=lumen&iframe_resize_id=ohm9633&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n","protected":false},"author":23,"menu_order":30,"template":"","meta":{"_candela_citation":"[{\"type\":\"copyrighted_video\",\"description\":\"People on Seashore\",\"author\":\"Huy Phan\",\"organization\":\"Pexels\",\"url\":\"https:\/\/www.pexels.com\/photo\/people-on-seashore-1377070\/\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":89,"module-header":"apply_it","content_attributions":[{"type":"copyrighted_video","description":"People on Seashore","author":"Huy Phan","organization":"Pexels","url":"https:\/\/www.pexels.com\/photo\/people-on-seashore-1377070\/","project":"","license":"arr","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters\/4617"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/users\/23"}],"version-history":[{"count":11,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters\/4617\/revisions"}],"predecessor-version":[{"id":15752,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters\/4617\/revisions\/15752"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/parts\/89"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapters\/4617\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/media?parent=4617"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/pressbooks\/v2\/chapter-type?post=4617"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/contributor?post=4617"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/quantitativereasoning\/wp-json\/wp\/v2\/license?post=4617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}