Name: Palomar, Aaron Fritz Ashley B.

Date: March 02, 2021

Course and Year: BSBA – FINANCIAL MANAGEMENT

Answer the following problem. Provide examples to support your answer.

1. Differentiate simple and general annuity according to payment interval and

interest period, time payment and duration.

 According to Payment Interval and interest Period

- Simple Annuity has a same payment interval and interest period, while the
General Annuity has a different payment interval and interest period.

 According to time of payment

- Ordinary annuity has a payment which are made at the end of each payment
interval, while the payment of Annuity due has made at the beginning of each
payment interval

 According to duration

- Payments in Annuity Certain begin and end at definite time, while the
Contingency Annuity begin and end at indefinite time

2. Give at least 3 situations represent simple, general annuity, ordinary annuity and
annuity due.

 The Payments of a Car lease issued every month and the interest rates are
compounded monthly

 My payment for my personal loan to the bank is made every 3 months with an
interest of 5% compounded semi – annually.

 The payment of rent is issued every beginning of the month, while the payment
for utility bills is issued at the end of the month.
Answer the following problem. Show your solutions.

3. Suppose Mr. Lim would like to save P4,500 every month in a fund that gives 6%
compounded quarterly. How much is the amount or the future value of her6
savings after 2 years?

4. In order to save for her college graduation. Anna decided to save P300.00 at the
end of the month. If the bank pays 0.3% compounded monthly, how much will
her money be at the end of 4 years?

5. Tina works hard because she wants to have enough money in her retirement
account when she reaches the age of 60. She wants to withdraw P 20,000.00
every monthly for 20 years starting 3 months after she retires. How much must
Tina deposit at retirement at 9% per year compounded monthly for annuity?

6. Mr. Perez paid P320,000.00 as down payment for a car. The remaining amount
is to be settled by paying 18,300.00 at the end of each month for 5 years, if he
interest is 11.3% compounded monthly, what is the cash prize of his car?

7. Mrs. Grey borrowed P500,000.00. She agrees to pay the principal plus the
interest by paying an equal amount of money each year for 4 years. What should
be her annual payment if the interest is 9.2% compounded annually?