ES032_P3-C1

Problem I.
DEFFERED ANNUITY
Finding P when given A

• Let's say a mother wants to know how much money

she needs to put, into 8% annual interest account on
the day her daughter is born to provide withdrawals
of $3,000 on each of daughters 13th, 14th, and 15th
birthdays.
 A =$3,000
SOLUTIONS
i. Given:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
i = 8%
N = 3 years P=?
A = $3,000
ii. Given:
(1+𝑖)𝑁 −1 i = 8%
P=A
𝑖(1+𝑖)𝑁 N = 12 years
F = $7,731.29
P = $3,000 (P/A, 8%, 3)
(1+0.08)3 −1 P = F 1 + 𝑖 −𝑁
P = $3,000
0.08(1+0.08)3 P = $7,7321.29 (P/F, 8%, 12)
P = $3,000 2.577 P = $7,731.29 1 + 0.08 −12
P = $7,731.29 𝐹12 P = $3,070.20 The amount would
have to pay.
Problem II.
DEFFERED ANNUITY
Finding F when given A
• Dianne commits to invest 10,000 php now for the college
tuition of her 2-year-old son Azrael. If the funds earn 14%
effective, how much will Azrael get each year starting from
his 18th birthday to 22nd birthday? How much is the total
amount saved on his 17th year?
 SOLUTION:

i.
Given:
P = 10,000 ₱10,000 15periods 5periods
i = 14%
N = 5 periods 2 3 4 5 17 18 19 20 21 22
j = 15
𝑭𝟏𝟕 = ?

(1+𝑖)𝑁 −1
F=A
𝑖 A=?

F = A (F/A, 14%, 5)
(1+0.14)5 −1
F=A
0.14
F = ₱6.6101 A
 SOLUTION:
₱10,000 15periods 5periods

ii. Given: 2 3 4 5 17 18 19 20 21 22
P = 10,000
i = 14% 𝑭𝟏𝟕 = ?

N = 5 periods
j = 15 A=?
F = ₱6.6101 A
iii.
F=P 1+𝑖 𝑗 F = ₱6.6101 A
₱6.6101 A = ₱10,000 1 + 0.14 15 F = ₱6.6101 10,799
71379.37978
A= F = ₱71,382.47
6.6101
A = 10,799 php ❖ Starting from his 18th birthday, Azrael will have
10,799php annually and the total amount saved
On his 17th year is 71,382php.
 GROUP 5

❑GAMUTAN, WILLIE JHON

❑GAQUIT, JOSE MANUEL

❑GARCIANO, JEAN ALEX

❑HINOGUIN, JON NYZA

❑LONDON, CELESTELORRAINE