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General Mathematics
Quarter 2 – Module 3
Annuities
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General Mathematics – Grade 11

Alternative Delivery Mode
Quarter 2 – Module 3: Annuities
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist in any work of
the Government of the Philippines. However, prior approval of the government agency or office
wherein the work is created shall be necessary for exploitation of such work for profit. Such
agency or office may, among other things, impose as a condition the payment of royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
trademarks, etc.) included in this module are owned by their respective copyright holders.
Every effort has been exerted to locate and seek permission to use these materials from their
respective copyright owners. The publisher and authors do not represent nor claim ownership
over them.

Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

SENIOR HS MODULE DEVELOPMENT TEAM

Author : Haren B. Valencia

Co-Author – Content Evaluator : Chelsea Mae B. Brofar
Co-Author – Language Reviewer : Camille Anne C. Geronia
Co-Author – Illustrator : Haren B. Valencia
Co-Author – Layout Artist : Haren B. Valencia

Team Leaders:
School Head : Omar G. Magcalas
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Schools Division Superintendent : Romeo M. Alip, PhD, CESO V
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Telefax: (047) 237-2102
E-mail Address: bataan@deped.gov.ph
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General Mathematics
Quarter 2 – Module 3
Annuities
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Introductory Message
For the facilitator:

Welcome to the General Mathematics – Grade 11 Alternative Delivery Mode (ADM)

Module on Annuities!

This module was collaboratively designed, developed and reviewed by educators both
from public and private institutions to assist you, the teacher or facilitator in helping
the learners meet the standards set by the K to 12 Curriculum while overcoming
their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration their
needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Furthermore, you are expected to encourage and assist the
learners as they do the tasks included in the module.

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For the learner:

Welcome to the General Mathematics – Grade 11 Alternative Delivery Mode (ADM)

Module on Annuities!

The hand is one of the most symbolic part of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a learner
is capable and empowered to successfully achieve the relevant competencies and
skills at your own pace and time. Your academic success lies in your own hands!

This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning resource while being an active learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of the

lesson. This aims to help you discover and
understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled into process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or skill
into real life situations or concerns.

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Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of the
lesson learned. This also tends retention of
learned concepts.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it!

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What I Need to Know

After successfully completing this self-learning module, you are

expected to master essential knowledge and skills about Annuities.
Specifically, you more likely able to:
• illustrate simple and general annuities (M11GM-IIc-1);
• distinguish between simple and general annuities (M11GM-IIc-2);
• find the future value and present value of both simple annuities and
general annuities (M11GM-IIc-d-1);
• calculate the fair market value of a cash flow stream that includes
an annuity (M11GM-IId-2); and
• calculate the present value and period of deferral of a deferred
annuity (M11GM-IId-3).
These most essential learning competencies will be compressed into a
simple and interactive lesson that will be tackled along the way of your
academic journey with this self-learning module.
Enjoy your steps towards the attainment of our objectives. Are you
ready? If you are, let’s go!

What I Know

After familiarizing yourself to the objectives, it is important to diagnose

your stock knowledge about the lesson that you are about to explore.
Let us try the following Alternate Response Type of diagnostic test to
check what you already know about this lesson.
Remember that your score in this part of the module will not affect your
performance. So, it is okay to obtain bad scores. Let us have a warm-up!

Direction: On your answer sheets, write “WE HEAL” if the statement is

correct and write “WE RECOVER” if the statement is incorrect.
1. An annuity is a sequence of payments made at equal and fixed
intervals or periods of time.

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2. An ordinary annuity, at the end of the payment interval, is where

the periodic payments are made.
3. If the interest rate is compounded quarterly and you are
calculating the number of months. Multiply the number of periods
by four.
4. The result is the periodic rate of interest when you multiply the
interest rate per year by the compounding interval.
5. General annuity is an annuity where the payment interval does not
coincide with the interest conversion period.
6. The cash value of a loan is equal to the down payment minus the
present value of the periodic payments.
7. The difference between the amount deposited into an account and
the balance in the account is interest.
8. A cash flow is a term that refers to payments receive, or payment
deposit made.
9. Fair market is also called economic period.
10. Payment received is also called as cash out flows.

You may now check your answers if they are correct or not.
How is the result? Is it good or bad? Do not worry if you got bad scores
because that is a good indicator that you will be needing this self-learning
module. That means there are some competencies that you need to attain
and explore.
So, let’s go! Let us proceed to the next portion of this module for you to
attain the competencies that you are lacking.

Lesson

3 Annuities

What’s In

In this part, you are going to link your learned concept and skills from
the previous lessons which have something to do with Simple and
Compound Interests to this current lesson which is Annuities.

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Since Mathematics is a continuous discipline which links each

competency among each other, there are several concepts of Simple and
Compound Interests that are directly related to Annuities.
Now, you are going to answer the given activity below and let us find
out what are those concepts and terms which we will be linking to the
lesson of this module.
Direction: With the given jumbled letters, identify what is being
described in every clause. Write your answers on your answer sheets.
1. P – O – C – O – M – N – U – D ---- R – T – E – I – N – T – E – S
An interest is computed on the principal and on the accumulated
past interests
2. V – R – E – C – O – N – N – I – O – S ---- E – P – R – O – I – D
A time between successive conversions of interest
3. T – R – E – N – I – T – S – E ---- A – T – E – R
Computed by dividing the annual rate of interest and the
number of conversions per year
4. U – T – Y – I – N – A – N
A sequence of payments made at equal and fixed intervals or
periods of time
5. A – S – C – H ---- L – U – E – A – V
Equal to the down payment added to the present value of the
installment payments

At this point, check your answers if they are correct. If not, you may
read the given clauses and analyze why it is identified as it was.
Recall the terms that were discussed in the previous modules and try
to link them with the new terms you encountered in this portion of the
module. For at most 5 minutes, reflect on their similarities and differences
so that you will be able to go through this module smoothly.
If you are done reflecting and you familiarized yourself to the terms
related to annuities, you may proceed to the next part of this module! Way
to go!

What’s New

Now that you have linked the previous lesson to your approaching
learned concepts and skills through this module, let us consider the

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following activity that shows a situation that will lead you to your new
learning discovery.
Situation: It’s Monday! Nhoi is very excited and challenged for his
Modular Distance Learning (MDL) experience for Week 3 in General
Mathematics. His encounter with the past quarter and modules justifies
his excitement to learn more about the core subject. He has chosen Digital
Module Scheme of the MDL because it is more practical for his situation.
On the other hand, his smartphone notified him that the Module 3 of
General Mathematics has been uploaded in their Facebook Learning
Space, ready to be accessed and downloaded. Surprisingly, Nhoi has a
problem. He forgot the passcode of his smartphone!
Let us help Nhoi in decoding his passcode through answering the
following activity.
Direction: On your answer sheets, copy the Code Table, Word Hunt
Puzzle, and the Definition of Terms and search the following terms related
to annuities. Link them to their definitions and write the number that
corresponds to the definition.
Code Table:

CODE
TERM SIMPLE GENERAL DEFERRED PRESENT TERM FUTURE DEFERRAL

Word Hunt Puzzle:

D E F E Q W E R T T E R Y U I O P A S D F G
G E N E R A L M G E F E A T I M P L E H G E
P M A S I M P L E F E R T P I C S A N N E P
R D E F E R U I N T I E S R P E R I O D N R
E V A L U E S D E F E R R E D S I M A X E E
S T A S K R P E R V D E L S D M N J B G R S
E U K B H S R L A T E R D E F E R R A L I E
A B J L G C E N L E F E F N U H A I G C J Q
T V T E R I S M O F E R U T T X A C E D O K
U C E F E R E E O P Y T P X U Z Z D N M N P
W E F E R R P E Q F Q G W Y R Y B O E F N R
V D K W J X R I R H S Z G T E R M E R H L M

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Definition of Terms:
1. _______________ ANNUITY is an annuity that does not begin until
a given time interval has passed.
2. _________ is the time between last payment interval and the first
payment interval.
3. PERIOD OF _____________ is the time between the purchase of the
annuity and the start of the payments for the deferred annuity
4. ____________ VALUE is the sum of future values of all the
payments to be made during the entire term of the annuity.
5. _______________ VALUE is sum of present values of all the
payments to be made during the entire term of the annuity.
6. _____________ ANNUITY is an annuity where the interest period is
the same as the payment interval.
7. _______________ ANNUITY is an annuity where the interest period
is not the same as the payment interval.

Congratulations! You unlocked the smartphone of Nhoi. Now, he may

now access and download Module 3 of his subject, General Mathematics.
Let us continue helping Nhoi explore his learning experience through this
module!
The next portion of this module will be the brief discussion of the lesson.
This will be followed by series of activities for a formative assessment. Hey,
boost it up!

What is It

It’s time to take a general tour around Annuities. This portion of the
module acts a simple and brief discussion of the lesson that aims to help
you discover and understand new concepts and skills. This will really help
you understand the real-life applications of annuities.

Basically, the flow of the discussion will be starting with the

presentation of the concept and will be followed by the example.

Simple Annuities, General Annuities, and Deferred Annuities are the

topics to be elaborated on the next page of this module by revealing the
respective formula on their Future Values, and Present Values.

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SIMPLE ANNUITY – is an annuity where the payment interval coincides

with the interest conversion period.
This means that the payment interval is the same as the interest
conversion period.
The Time Diagram for an n-Payment Simple Annuity below
illustrates the simple annuity in which payments are made at the end of
the year.

R R R R R … R
0 1 2 3 4 5 n
The Time diagram goes with the formula in solving for the Amount
(Future Value) of Simple Annuity. The formula was derived from the
illustration of the Time Diagram.
Future Value, F, is a calculation of how much, given a defined interest
rate, a series of daily payments would be worth at some point in the future.
The Future Value, F, of a simple annuity is given by

(1 + 𝑗)𝑛 − 1
𝐹=𝑅
𝑗

where: F = Future Value of a Simple Annuity

R = Regular Payment of the Present Value
j = Interest Rate per Period
𝑖
𝑗=
𝑚
where: j = Interest Rate per Period
i = Interest Rate
m = Conversion Period
n = Number of Payments

𝑛 = 𝑡𝑚
where: n = Number of Payments
t = Term
m = Conversion Period

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So, let us consider the example below.

Problem Mr. Khufra deposits 2 400.00 Php at the end of the month in
a Rural Bank in the City of Balanga which pays 5% interest
compounded monthly. If there were no withdrawals made by
Mr. Khufra, how much will be the future value after 5 years?

Now, study and analyze the solution below to figure out how did we
come up with the correct answer.

R = 2 400.00 Php; i = 5% or 0.05;

Given
t= 5 years; m = 12

Unknown Future Value of a Simple Annuity (F)

(1 + 𝑗)𝑛 − 1
Formula 𝐹=𝑅
𝑗
Solution

𝑖 0.05
𝑗= = = 0.004
𝑚 12

𝑛 = 𝑡𝑚 = (5)(12) = 60
Solution
(1 + 𝑗)𝑛 − 1 (1 + 0.004)60
𝐹=𝑅 = 2 400.00
𝑗 0.004
≈ 762 384.43
Therefore, Mr. Khufra will have a future
Conclusion
value of 762 384.43 Php after 5 years.

Now, aside from the future value, there is also a formula in getting the
Present Value of a Simple Annuity.
A Present Value, P, calculation tells you, in comparison to the future
value calculation, how much money will be needed now to generate a series
of payments in the future, again assuming a fixed interest rate.
The Present Value, P, of a simple annuity is given by

1 − (1 + 𝑗)−𝑛
𝑃=𝑅
𝑗

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where: P = Present Value of a Simple Annuity

R = Regular Payment of the Present Value
j = Interest Rate per Period
𝑖
𝑗=
𝑚
where: j = Interest Rate per Period
i = Interest Rate
m = Conversion Period
n = Number of Payments

𝑛 = 𝑡𝑚
where: n = Number of Payments
t = Term
m = Conversion Period

At this point, we will be using the same example about Mr. Khufra’s
deposit. This time, compute for the Present Value.
Let us explore the solution below so that you can understand the
process of computing the final answer.

R = 2 400.00 Php; i = 5% or 0.05;

Given
t= 5 years; m = 12

Unknown Present Value of a Simple Annuity (P)

1 − (1 + 𝑗)−𝑛
Formula 𝑃=𝑅
𝑗
Solution

𝑖 0.05
𝑗=𝑚= = 0.004
12

𝑛 = 𝑡𝑚 = (5)(12) = 60
Solution
1 − (1 + 𝑗)−𝑛
𝑃=𝑅
𝑗
1 − (1 + 0.004)−60
= 2 400.00 ≈ 127 797.28
0.004
Therefore, Mr. Khufra will have a present
Conclusion
value of 127 797.28 Php after 5 years.

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Aside from the Future and Present Values of a Simple Annuity, there is
what we call the Cash Value or Cash Price (of a purchase) where it is
equal to the down payment (if there is any) added to the present value of
the installment payments.
Let us explore the given example below.

Ms. Kimmy Esmeralda is a car sales agent in a car company

in Bataan where there is a new and practical model of SUV.
Her manager gave her the details of the vehicle and ask her
Problem

to identify its selling price. The details are as follows: Down

payment: 250 000.00 Php; Regular Payment at the end of
each month: 18 230.00 Php; Term: 7 years; Interest: 12 %
compounded monthly.

At this point, try to study the solution below as we come up with the
correct answer and conclusion.

R = 18 230.00 Php; i = 12% or 0.12;

Given t= 7 years; m = 12;
Down Payment = 250 000.00 Php

Unknown Cash Value or Cash Price (Selling Price)

Formula Cash Price = Present Value + Down Payment

𝑖 0.12
𝑗=𝑚= = 0.01
12
Solution

𝑛 = 𝑡𝑚 = (7)(12) = 84

1 − (1 + 𝑗)−𝑛
𝑃=𝑅
Solution 𝑗
1 − (1 + 0.01)−84
= 18 230.00 ≈ 1 032 701.29
0.01

Cash Price = 1 032 701.29 + 250 000.00

Cash Price = 1 282 701.29

Therefore, Cash price of the SUV is

Conclusion
1 282 701.29 Php.

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********************

GENERAL ANNUITY – is an annuity where the payment interval does

not accord with the interest conversion period.
This means that the length of the payment interval is not the same as
the length of the interest compounding period.
The same Time Diagram will be utilized and so it also goes with the
formula in solving for the Amount (Future Value) of General Annuity.
The formula was derived from the illustration of the Time Diagram.
It is more complicated than the Simple Annuity. In here, you are to
consider that the given interest rate per period must be converted to an
equivalent rate per payment interval. By doing this, you are reducing the
problem into a Simple Annuity by solving the new value of j.
The same formula will be utilized in General Annuity because we first
reduce the problem by converting the interest rate to its equivalent interest
rate for its corresponding payment interval.
Again, the Future Value, F, formula will be utilized for the general
annuity and it is given by

(1 + 𝑗)𝑛 − 1
𝐹=𝑅
𝑗

where: F = Future Value of a Simple Annuity

R = Regular Payment of the Present Value
j = Interest Rate per Payment Interval
n = Number of Payments

𝑛 = 𝑡𝑚
where: n = Number of Payments
t = Term
m = Conversion Period

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So, let us consider the example below.

Problem An ABM student named Eudora deposited to a bank in

Dinalupihan her 8 500.00 Php cash from her piggy bank. It
was made at the end of every month in an investment paying
interest at 10% quarterly. How much will Eudora get out of
her investment after 5 years?

In General Annuity, it is a bit different. The solution includes the

computation of j first to be included in the given. This is to be followed by
the usual process of solving Simple Annuity.
In solving for j, we will first determine an equivalent rate whose
conversion period coincides with the payment period. This is equivalent to
solving for the new value of j where we will equate the two equations with
different conversion periods and the same rate of interest. Solving for j,
that is
𝑗 (12) 12 0.10 4
(1 + ) = (1 + ) The value of m on the left side is 12
12 4
because Eudora deposits monthly and
the value of m on the right side is 4
because the paying interest is quarterly.
𝑗 (12) 12
(1 + ) = 1.103813 By computing the left side of the
12
equation, take note that you will use at
least 6 decimal places or the exact value
1
𝑗 (12)
1+ = (1.103813)12 To eliminate the exponent on the right
12
of the equation, raise the whole equation
to the reciprocal of the exponent, 12.
𝑗 (12)
1+ = 1.008265 In simplifying the right side of the
12
equation, round off it again to 6 decimal
places.
𝑗 (12)
= 1.008265 − 1 Apply Addition Property of Equality by
12
adding –1 on both sides of the equation.
𝑗 = 0.8265% This is the new value of j. To convert it
into percentage, multiply it by 100.

Now that we have the value of j, we are now ready to solve for the Future
Value of the General Annuity.
Take a glimpse of the solution to the problem which is presented on the
next page. Make sure to familiarize yourself with the process of getting the
correct answer.

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R = 8 500.00 Php; i = 10% or 0.10;

Given
t= 5 years; m = 4; j = 0.8265 % or 0.008265

Unknown Future Value of a General Annuity (F)

(1 + 𝑗)𝑛 − 1
Formula 𝐹=𝑅
𝑗
Solution

𝑛 = 𝑡𝑚 = (5)(4) = 20

(1 + 𝑗)𝑛 − 1
Solution 𝐹=𝑅
𝑗
(1 + 0.008265)20
= 8 500.00 ≈ 1 212 466.93
0.008265

Therefore, Eudora will get 1 212 466.93 Php

Conclusion
out of her investment after 5 years.

Just like the Simple Annuity and aside from the future value, there is
also a formula in getting the Present Value of a General Annuity.
The Present Value, P, of a general annuity is also given by

1 − (1 + 𝑗)−𝑛
𝑃=𝑅
𝑗

where: P = Present Value of a Simple Annuity

R = Regular Payment of the Present Value
j = Interest Rate per Period
n = Number of Payments

𝑛 = 𝑡𝑚
where: n = Number of Payments
t = Term
m = Conversion Period

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At this point, we will also be using the same example about Eudora’s
deposit to a bank in Dinalupihan. This time, compute for the Present
Value.
Now, explore the solution below for you to be familiarized with how the
answer was derived.

R = 8 500.00 Php; i = 10% or 0.10;

Given
T = 5 years; m = 4; j = 0.8265 % or 0.008265

Unknown Present Value of a General Annuity (P)

1 − (1 + 𝑗)−𝑛
Formula 𝑃=𝑅
𝑗
Solution

𝑛 = 𝑡𝑚 = (5)(4) = 20

1 − (1 + 𝑗)−𝑛
Solution 𝑃=𝑅
𝑗
1 − (1 + 0.008265)−20
= 8 500.00 ≈ 156 100.29
0.008265

Therefore, Eudora will have a present value

Conclusion
of 156 100.29 Php after 5 years.

********************

DEFERRED ANNUITY – an annuity that does not begin until a given

time has expired.
This means that the periodic payment does not begin until the
expiration of a specified time. The length of time for which there is no
payments is called Period of Deferral. This is the time between the
purchase of an annuity and the start of the payments for the deferred
annuity.
The Time Diagram for a Deferred Annuity below illustrates the
deferred annuity in which payments are made considering periods of
deferral.

R* R* … R* R R … R*
0 1 2 … k k+1 k+2 k+n

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In the time diagram, the period of deferral is k as the regular payments

of R start at time k + 1. The R* notation represents k "artificial payments,"
each equal to R, but not paid during the deferral period.
The Time Diagram also goes with the formula in solving for the Present
Value of Deferred Annuity. The formula was derived from the illustration
of the Time Diagram.
The Present Value, P, of a deferred annuity is given by

1 − (1 + 𝑗)−(𝑘+𝑛) 1 − (1 + 𝑗)−𝑘
𝑃=𝑅 −𝑅
𝑗 𝑗

where: P = Present Value of a Deferred Annuity

R = Regular Payment of the Present Value
j = Interest Rate per Period
𝑖
𝑗=
𝑚
where: j = Interest Rate per Period
i = Interest Rate
m = Conversion Period
n = Number of Payments

𝑛 = 𝑡𝑚
where: n = Number of Payments
t = Term
m = Conversion Period
k = Number of Times of Deferment Conversion

So, let us consider the example below.

Lylia availed of a loan from a bank in Orani that gave her an

Problem

option to pay 20 000.00 Php monthly for 2 years. The first

payment is due after 4 months. How much is the present value
of the loan if the interest rate is 10% converted monthly?

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At this point, let us take a look at the solution below and take note of
the process of computing for the final answer.

R = 20 000.00 Php; i = 10% or 0.10;

Given
t= 2 years; m = 12; k = 3

Unknown Present Value of a Deferred Annuity (P)

1 − (1 + 𝑗)−(𝑘+𝑛) 1 − (1 + 𝑗)−𝑘
Formula 𝑃=𝑅 −𝑅
𝑗 𝑗

𝑖 0.10
𝑗= = = 0.008
𝑚 12

𝑛 = 𝑡𝑚 = (2)(12) = 24

1 − (1 + 𝑗)−(𝑘+𝑛) 1 − (1 + 𝑗)−𝑘
𝑃=𝑅 −𝑅
𝑗 𝑗
Solution

(1 + 0.008)−(3+24)
𝑃 = 20 000.00
0.008
Solution 1 − (1 + 0.008)−3
− 20 000.00
0.008
(1.008)−27
𝑃 = 20 000.00
0.008
1 − (1.008)−3
− 20 000.00
0.008

𝑃 = 2 016 070.16 − 59 052.65

𝑃 = 1 957 017.51

Therefore, the present value of the loan of

Conclusion Lylia, if the interest rate is 10% converted
monthly, is 1 957 017.51 Php after 2 years.

What’s More

Using the given annuity problems in the closed figure on the next page,
fill in the blanks in the statement that follows.

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1 A deposit of 120 000.00 Php is placed into a college fund

at the beginning of every month for 10 years. The fund
earns 9% annual interest, compounded monthly, and paid
at the end of the month. How much is in the account right
after the last deposit?

a. The type of annuity illustrated in the problem is _______.

b. The term is ________.
c. The number of conversion period is______.
d. The interest rate per period is _______.
e. The present value of the deposit is ________.

2 Find the amount of an annuity of 4 000.00 Php every 3

months for 10 years if interest is 8%, compounded annually.

a. The type of annuity illustrated in the problem is _______.

b. The total number of payments is ________.
c. The number of conversion period ______.
d. The interest rate per period is _______.
e. The present value of the loan is ________.

3 A loan of 30 000.00 Php is to be paid monthly for 5 years

that will start at the end of 4 years. If converted monthly
at 12%, how much is the monthly payment?

a. The type of annuity illustrated in the problem is _______.

b. The total number of payments is ________.
c. The number of conversion period in the period deferral is______.
d. The interest rate per period is _______.
e. The present value of the loan is ________.

What I Have Learned

To generalize your learned skills and concepts, take note of the

similarities and differences of Simple Annuity and General Annuity.

Direction: On your answer sheets, maximize the use of Venn diagram

on the next page by listing the similarities and differences of Simple and
General Annuities, respectively.

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Simple Annuity General Annuity

What I Can Do

To transfer your new knowledge and skill into real life situations or
concerns, perform the given activity below.

Direction: Conduct an interview with your friend, a family member, or

a classmate regarding a borrowed money involving annuities. If you can do
it online, maximize the use of Facebook Messenger for your
communication. If you do not have access to internet connection, you may
ask an interviewee within your compound. Remember to ask first the
permission of the interviewee when disclosing his/her general information.

After the interview, construct your own problem about his/her

situation. Show your complete solutions and validate if your answer is
parallel to his/her expectations about his/her loan. Consider the example
problem on the next page and follow the steps in solving real-life problems
involving annuities.

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Example. My cousin, Hershey, is a newlywed public school teacher who

plans for the education of her future children. Initially, at the beginning of
each month, 10 000.00 Php was deposited for 8 years in a bank in Orani. At
the end of the month, the investment collects 9% of annual interest and is
compounded monthly. After the last deposit, how much is in the account?

Assessment

Let us see if you have mastered the skills and concepts of this lesson.
Perform the given activity below.

Direction: Column X displays the Types of Annuities, Column Y

enumerates the sample problems, and Column Z reveals the answers. On
your answer sheets, match Column X to Column Y and Match Column Y
to Column Z by writing the same and exact number or letter that
corresponds to your answers.

Column X Column Y Column Z

__ A. Simple __ 1. A car is to be purchased in a. 36 647.36
Annuity monthly payments of 17 Php
000.00 Php for 4 years
starting at the end of 4
months. How much is the
cash value of the car if the
interest used is 12%
monthly?

__ B. General __ 2. A four-year lease agreement b. 6 825.05

Annuity requires payments of 10 Php
000.00 Php at the
beginning of every year. If
the interest is 6%
compounded monthly,
what is the cash value of
the lease?

__ C. Deferred __ 3. You make eleven semi- c. 626 571.56

Annuity annual deposits of 550.00 Php
Php into a savings account.
The interest rate is 4.72%
compounded quarterly.
What will be its account
balance?

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Additional Activities

Okay! This is our last wrap up. You will be able to help Nhoi all
throughout this Module 3 in General Mathematics.
The following are just supplemental problems to enrich your knowledge
and skills of the lesson learned. Good luck!
Direction: Read, analyze, and solve the following worded problems
involving annuities. Show your complete solutions on your answer sheets.
1. Find the future value at the end of the payment period. Payments of
1 000.00 Php each are made at the beginning of each year for 3 years
with interest at 5% compounded annually.
2. How much deposit did Bea make at the beginning of each month
that will accumulate to 120 000.00 Php at 8% compounded semi-
annually at the end of 10 years?
3. Harry borrowed an amount of money from Donna. He agrees to pay
the principal plus the interest by paying 38 937.76 Php each year
for three years. How much money did he borrow if the interest is 8%
compounded quarterly?
4. Mr. Santos received two offers on a lot that he wants to sell. Mr.
Reyes has offered 50 000.00 Php and one million pesos lump sum
payment for 5 years from now. Mr. Cruz has offered 50 000.00 Php
plus 40 000.00 Php every quarter for 5 years. Compare the fair
market values of the two offers if the money can earn 5%
compounded annually. Which offer has a higher market value?
5. Your mother’s savings may allow you to withdraw 50 000.00 Php
semi-annually for 5 years starting at the end of 5 years. How much
is your mother’s savings if the interest rate is 8% converted semi –
annually?
6. **Try answering the example problem of my cousin, Hershey, given
on the “What I Can Do” part of this module.**

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