Present value annuities: a regular income from a lump sum and superannuation

What this note covers

1. What a present value annuity is, and why it is the savings model run backwards
2. Setting up the financial solver: the five variables and the sign convention
3. Worked example: how much income can a lump sum provide?
4. Which variable is unknown? Reading the question to choose the target
5. Superannuation: the two-phase problem
6. Limitations of the model and the judgements examiners want
7. How this topic is examined in the SACE Stage 2 paper, and what separates a top answer

7 sections · 12 key terms & formulas · 6 common mistakes