Future Value of Simple Ordinary Annuity, F

F=R ¿ ¿
where,
R is the regular payment or periodic payment
i is the interest rate per period
n is the number of payments

r
i=
m
where,
r is the nominal rate
m is the number of conversion periods

Present Value of Simple Ordinary Annuity, P

P=R 1−¿ ¿

where,
R is the regular payment or periodic payment
i is the interest rate per period
n is the number of payments

r
i=
m
where,
r is the nominal rate
m is the number of conversion periods

Periodic Payment R of an Annuity

F
R=
¿¿¿

P
R=
1−¿ ¿¿

FUTURE VALUE OF AN ANNUITY DUE

F AD=R ¿
where,
F is the future value of an annuity due
AD

R is the regular payment or periodic payment

i is the interest rate per period/periodic rate
n is the number of payments

PRESENT VALUE OF AN ANNUITY DUE

P AD=R ¿

where,
P is the present value of an annuity due
AD

R is the regular payment or periodic payment

i is the interest rate per period/periodic rate
n is the number of payments

ACTIVITY 3

In order for Lucy to save for her debut party. She decided to
save 800 pesos at the end of each month. If the bank pays
0.30% compounded monthly, how much will her money at the
end of 3 years?
Given:
 0.30
r = 0.30% => 100 =0.003
t = 3 yrs
R = 800 (regular payment)
m = 12
F=?
r 0.003
i= = =0.0003
m 12
n=mt=12 ( 3 ) =36
F=R ¿ ¿
F=R ¿ ¿

F=28 , 951.72

Dr. Go is considering a 30-year money loan at 6% interest,

compounded monthly. He can make payments of ₱5,000 every
end of the month. How much is the largest loan that he can
afford?
Given:
r = 0.06
t = 30 yrs
R = 5000
m = 12
P=?
r 0.06
i= = =0.005
m 12
n=mt=12 ( 30 )=360

P=R 1−¿ ¿
P=5000 1−¿ ¿
P=833,958.07

Suppose Mr. and Mrs. Bautista deposits ₱10,000 at the

beginning of each year for 5 years in an investment that earns
9% per year compounded annually. What is the amount or
future value of the annuity?
Given:
t = 5 yrs
r = 0.09
R = 10000
m=1
r 0.09
i= = =0.09
m 1
n=mt=1 ( 5 ) =5

F AD=R ¿
F AD=10000 ¿
F AD=65 , 233.35

Find the present value of a series of periodic payments of

₱5,000 made at the beginning of every month for 3.5 years if
money is worth 9% compounded monthly.
Given:
5
t = 3.5 yrs => 12 =0.42=¿ 3.42
r = 0.09
R = 5000
m = 12
P=?
r 0.09
i= = =0.0075
m 12
n=mt=12 ( 3.42 )=41.04
P AD=5000¿

P AD=5000¿
1−0.7414263306
P AD=5000[ +1]
0.0075
0.2585736694
P AD=5000[ +1]
0.0075
P AD=5000(34 .47648925+1)
P AD=5000 ( 35.47648925 )
P AD=177,382.45

ACTIVITY