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General Mathematics
Activity Sheets
Quarter 2 – MELC 9
Calculating the Present Value and
Period of Deferral of a Deferred
Annuity
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Introductory Message
Welcome to General Mathematics 11!
The General Mathematics Activity Sheet will help you facilitate the
teaching-learning activities specified in each Most Essential Learning Competency
(MELC) with minimal or no face-to-face encounter between you and learner. This
will be made available to the learners with the references/links to ease the
independent learning.
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Quarter 4, Week 2
R* R* … R* R R ... R
0 1 2 … k k+1 k+1 k+n
In this time diagram, the period of deferral is k because the regular payments of
R start at time k + 1.
The notation R* represents k “artificial payments”, each equal to R, but are not
actually paid during the period of deferral.
P=R - R
where
R is the regular payment
r is the interest rate;
m is the conversion period;
t is the time;
k is the number of conversion periods in the deferral
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Solution: Given:
R = ₱10,000
m=4
I(4)= 0.08
The Annuity is deferred for 20 years and it will go on for 5 years. The first
payment is due three months (one quarter) after his 60 th birthday, or at the
end of the 81st conversion period. Thus, there are 80 artificial payments.
Number of artificial payments: k = mt = (4)(20) = 80
Number of actual payments: n = mt = (4) (5) = 20
0.08
Interest rate per period j = = 4 = 0.02
If you assume that there are payments in the period of deferral, there
would be a total of K + n = 80 + 20 = 100 payments.
Time Diagram:
Thus, the present value of the deferred annuity can be solved as:
P=R - R
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P=R - R
P = (₱1,000) - (₱1,000)
P = (₱1,000) - (₱1,000)
P = (₱1,000) - (₱1,000)
P = ₱23,559.61 - ₱2,940.99
P = ₱20,618.62
Exercise 1: Arabella converted her loan to light payments which gives her
an option to pay ₱12,000 every 2 years for 6 years. The first payment is
due 4 years from now. How much is the amount of the loan if the interest
rate is 10% converted every 2 years?
Exercise 2: Find the present value of a deferred annuity on a regular
payment of ₱1,000 semi-annually for 3 years that is deferred for 1 year on
a rate of 2.5% compounded semi-annually.
Guide Questions
1. What clues are needed to identify the given data?
2. What are the steps in finding for the present value of a deferred
annuity?
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V. Reflection
Instruction. Reflect on the following questions and write your response on
your journal.
1. What important idea/s have you learned from the learning activity
sheet?
2. What important value/s has been embedded to you by the lesson?
3. In what way can you apply or use the lessons learned in your daily life
as a student or in the future?