YOUR

PERSONAL
TREASURE DREAM
MAP
 commit to PAY YOUR
LOAN THROUGH:
annuity OR
AMORTIZATION!
 annuity

 annuity/Amortization=
a type Of financial activity (savings,
investment, loan, purchase of asset,
etc.) that involves a SERIES OF
ORGANIZED/SYSTEMATIC/PERIODIC
PAYMENTS THROUGHOUT THE TERM
annuity

 ordinary Annuity=
a TYPE OF ANNUITY WHEREBY
PAYMENTS ARE MADE AT THE END
OF EACH TERM
 Diagram for Ordinary Annuity=
 Create your
very own
annuity plan!
Starting your life stage financial planning
through annuity
What you need to do:
- Contemplate on your “CHRISTMAS GIFT” to yourself
- Set Php 6,000 as the PERIODIC PAYMENT (denoted by R) you’ll pay
to your parents
- Set a time period (t) of 5 yrs. for the entirety of your
savings/investment/loan/asset purchase, etc.
- Find the FUTURE AMOUNT (denoted by S) of your Annuity
- Assume an Interest Rate (i) of 0.9375%
- Assume yearly frequency of payment (m) = quarterly = 4
Starting your life stage financial planning
through annuity

 Formula for future amount of

annuity=
(𝟏+𝒊) 𝒏 −𝟏
S=r 𝒊
 future amount of ordinary `
annuity/amortization=
 The value of
annuity/amortization at the
end of the term
 Sum of all periodic payments
OF EACH TERM plus all
accumulated compound
interests
 Diagram for Ordinary Annuity=
Formula for future amount of annuity

 Important variables:
 (i) = Interest rate
r = Amount of periodic
payment of an annuity
(size or value of each payment
of an annuity)
n = Total # of payments or
periods for entire
Important terms:
 Total # of payment periods (n)
for the entire loan duration=
Product of yearly frequency
of payment (m) & the # of years
(t)
 Formula: n = tm
Starting your life stage financial planning
through annuity

What you need to do:

- Determine the PRESENT VALUE (denoted by A) of your
Annuity
- Same MONTHLY PERIODIC PAYMENT (R) will be applied
- Same time period (t) will be applied
- Same Interest Rate (i) will be applied
- Same # of conversion periods in a year (m)
Starting your life stage financial planning
through annuity

 Formula for present value of

annuity=
𝟏 − (𝟏+𝒊) −𝒏
a=r 𝒊
Starting your life stage financial planning through
annuity
What you need to do:
- Next , imagine yourself getting curious as to what the
value of your annuity would be after your 10th payment
of your loan
- Still assume an interest rate of 0.9375%
- FIND= Value of your annuity after 10th payment of your
loan has been made
Starting your life stage financial planning
through annuity

 Formula for the amount of the

annuity before end of term (at any
time)=

(𝟏+𝒊) 𝒌 −𝟏
𝑺𝒌 = r
𝒊
Starting your life stage financial planning
through annuity

(𝟏+𝒊) 𝒌 −𝟏
 𝑺𝒌 = r
𝒊
 Where k is the # of payments already
made/paid before end of loan duration