Problem Set on Deferred Annuity

1. A parent on the day the child is born wishes to determine what lump sum would have to
be paid into an account annually, in order to withdraw ₱20,000 each on the child’s 18 th,
19th, 20th and 21st birthdays. Use I=5%
2. An annual deposit of ₱ 1,270 is placed at the end of each year for 6 years. If the fund
invested has a rate of 5% compounded annually, how much is the worth of this fund at
the end of 9 years?
3. If the money is worth 5% compounded semi-annually, find the present value of a
sequence of 12 semi-annual payments of ₱500 each, the first of which is due at the end
of four and half years.
4. The cash price of an apartment condominium is ₱85,908 and can be acquired by a
downpayment of ₱50,000 and a yearly payment of ₱10,000 at the end of each year for
ten years starting at the end of five years from the date of purchase. If money is worth
“x” percent compounded annually, what is the value of “x”?
5. A shirt factory has just installed a boiler. It is expected that there will be no
maintenance expenses until the end of the 11 th year, when ₱400 will be spent in the
boiler ₱400 will be spent on the each successive year until the boiler is scrapped at the
age of 35 years. What sum of money set aside at his time at six percent interest will
take care all of maintenance expenses for the boiler.
6. A new generator has just been installed. It is expected that there will be no maintenance
charges until the end of the sixth year, when ₱300 will be spent at the end of each
successive year until the generator is scrapped at the end of its fourteenth year of
service. What sum of money set aside at the time of installation of the generator at six
percent will take care all maintenance expenses for the generator?
7. A house and lot can be acquired a downpayment of ₱500