ANNUITIES

Engr. Charity Hope Gayatin

present worth (P/A) and capital recovery factors (A/P) Derive and use factors for uniform series – compound amount (F/A) and sinking fund (A/F) .Learning Outcome Derive and use factors for uniform series .

Annuities ANNUITY are series of equal payments occurring at equal periods of time ORDINARY ANNUITY are series of equal payments made at the end of each period DEFERRED ANNUITY are series of equal payments where the first payment is made several periods after the beginning of the annuity PERPETUITY are series of equal payments in which the payments continue indefinitely P=A/i .

. The Capital Recovery Factor (A/P) is used to calculate the equivalent uniform annual worth A over n years for a given P in year 0.Uniform Series Present Worth (P/A) and Capital Recovery Factor (A/P) The Uniform Series Present Worth Factor (P/A) is used to calculate the equivalent P value in year 0 for a uniform end-of-period series of A values beginning at the end period 1 and extending for n periods. when the interest rate is i.

Uniform Series Present Worth (P/A) and Capital Recovery Factor (A/P) .

Uniform Series Present Worth (P/A) and Capital Recovery Factor (A/P) .

. The last A value and F occur at the same time. The uniform series A begins at the end of year (period) 1 and continues through the year of the given F.Sinking Fund Factor (A/F) and Uniform Series Compound Amount Factor (F/A) The Sinking Fund Factor (A/F) determines the uniform annual series A that is equivalent to a given future amount F. The future amount F occurs in the same period as the last A. The Uniform Series Compound Amount Factor (F/A) is used to yield the future worth of the uniform series.

Sinking Fund Factor (A/F) and Uniform Series Compound Amount Factor (F/A) .

Sinking Fund Factor (A/F) and Uniform Series Compound Amount Factor (F/A) .

a man deposited to a trust company a sufficient amount of money so that the boy could receive 5 annual payments of P10000 each for his college tuition fees. What are the present worth and the accumulated amount of a 10 year annuity paying P10000 at the end of each year. There was also a provision that the grandson could elect to withdraw no annual payments and receive a single lump amount on his 25th birthday.Problem 1. a) How much did the boy receive as single payment? b) How much did the grandfather deposit? 3. On the day his grand son was born. P40000 for the next 6 years and P50000 thereafter? . What amount of money invested today at 15% interest can provide the following scholarship: P30000 at the end of each year for 6 years. The grandson chose this option. with interest at 15% compounded annually? 2. starting with his 18th birthday. Interest at the rate of 12% per annum was to be paid on all amounts on deposit.