ANNUITY IS A CONTRACT BETWEEN YOU AND AN INSURANCE

COMPANY IN WHICH YOU MAKE A LUMP SUM PAYMENT OR

SERIES OF PAYMENTS AND IN RETURN RECEIVE REGULAR
DISBURSEMENTS BEGINNING EITHER IMMEDIATELY OR SOME
POINT IN THE FUTURE .
INSURANCE IS A FINANCIAL SAFETY NET , THAT HELPS YOU AND YOUR LOVED
BAD HAPPENS. LIKE FIRE , THEFT , CAR ACCIDENT , LAW SUIT , DEATH , ETC.
LPS YOU AND YOUR LOVED ONES RECOVER AFTER SOMETHING
, LAW SUIT , DEATH , ETC.
 TYPES OF ANNUITY

1. IMMEDIATE ANNUITY
2. VARIABLE ANNUITIES
3. FIXED INDEXED ANNUITY

FIXED INDEX ANNUITIES ARE A TYPE OF FIXED ANNUITY THAT EARNS INTEREST BASED O
IT MEASURES HOW THE MARKET OR PART OF THE MARKET PERFORMS .
THE INTEREST RATE IS GUARANTEED NEVER TO BE LESS THAN ZERO , EVEN IF THE MARK
YOUR TAX SHELTERED RETIREMENT ACCOUNTS GET THE OPPORTUNITY TO EARN MARKE
AT EARNS INTEREST BASED ON CHANGES IN A MARKET INDEX .
PERFORMS .
N ZERO , EVEN IF THE MARKET GOES DOWN.
PORTUNITY TO EARN MARKET GAINS WITH NO DOWNSIDE POTENTIAL AND LESS DEFERRED .
4, FIXED ANNUITIES
5. DEFERRED INCOME ANNUITIES

DEFERRED INCOME ANNUITIES ( DIA ) IS AN INCOME CONTRACT IN WHICH A

PERIOD OR LIFE TIME ) IN THE FUTURE
ME CONTRACT IN WHICH A CUSTOMER EXCHANGE A LUMP SUM OF MONEY UPFRONT TODAY FOR A DEFERRED , IRREVOCABLE R
A DEFERRED , IRREVOCABLE RETIREMENT INCOME ( OVER A FIXED
ANNUITY
IT CAN BE A YEARLY ALLOWANCE , REGULAR PAYMENTS , MONTHLY RENTALS OR REGULA

IT MAY ALSO BE REFERRED TO ALL THE PAYMENTS MADE AT A SPECIFIC TIME FRAME

IT USUALLY REPRESENTS A CERTAIN AMOUNT OF THE INTEREST DERIVED FROM A PRINC

CLASSIFICATION OF ANNUITIES

1. ANNUITY CERTAIN IF THE TERM OF THE ANNUITY HAS BEEN STIPULATED AND A
EDUCATIONAL PLAN

2. CONTINGENT ANNUITY IF THE TERM DEPENDS ON SOME UNCERTAIN EVENT/S

INSURANCE PLAN

SIMPLE ANNUITY IF THE PAYMENT INTERVAL COINCIDES WITH THE TIME OF INTEREST C

CLASSIFICATION OF SIMPLE ANNUITY

1. ORDINARY ANNUITY PAYMENTS AND DEPOSITSE MADE AT THE END O

2. ANNUITY DUE PAYMENTS AND DEPOSITS ARE MADE AT THE BE

3. DEFERRED ANNUITY THE FIRST PAYMENT IS TO BE MADE ON SOME F

2. IF THE PRESENT VALUE OF THE ANNUITY IS P 20000. ASSUMING A MONTHLY INTERE

 NTHLY RENTALS OR REGULAR INCOME DERIVED FRTOM CERTAIN INVESTMENT.

AT A SPECIFIC TIME FRAME OR PAYMENT INTERVALS

EST DERIVED FROM A PRINCIPAL FUND INVESTED OR DEPOSITED , BUT IT MAY ALSO INCLUDE REGULAR PAYMENTS OF PRINCIPAL AM

HAS BEEN STIPULATED AND AGREED UPON BETWEEN THE POLICY HOLDER AND THE CREDITOR

ME UNCERTAIN EVENT/S

WITH THE TIME OF INTEREST CONVERSDION. GENERAL ANNUITY

POSITSE MADE AT THE END OF EACH PAYMENT INTERVAL

POSITS ARE MADE AT THE BEGINNING OF EACH PAYMENT INTERVAL

T IS TO BE MADE ON SOME FUTURE DATE .

UMING A MONTHLY INTEREST OF 0.5% . FIND THE VALUE EACH PAYMENT AFTER EVERY MONTH FOR 10 YEARS.
PAYMENTS OF PRINCIPAL AMOUNT BORROWED OR LOANED .
 ORDINARY ANNUITY

FINAL AMOUNT AND PRESENT VALUE OF AN ORDINARY ANNUITY :

FINAL AMOUNT :

S R*(((1+i)^n-1)/i)

WHERE :
S SUM OF AN ORDINARY ANNUITY

R REGULAR , PERIODIC PAYMENT

A PRESENT VALUE

n TOTAL NUMBER OF CONVERSION PERIODS

i PERIODIC RATE

1. MR. Z DEPOSITS P 3500 EVERY END OF THE MONTH AT BANK Y THAT CREDITS 6% MO

GIVEN :
R 3500 S

J 0.06

i j/m 0.005

m 12

n 6

2. HOW MUCH IS THE CASH EQUIVALENT OF AN ELECTRIC PRODUCT WHICH CAN BE PURCH
IS WORTH 4.5% COMPOUNDED QUARTERLY .

GIVEN :

R 2500

DP 5000
 A

3. DETERMINE THE FINAL AMOUNT AND PRESENT VALUE OF AN ANNUITY OF P 2000 PAYA

GIVEN :

R 2000

j 0.06

m 12

i 0.005

t 2 yrs

n 24
 ORDINARY ANNUITY

PRESENT VALUE

A R*(( 1 - (1 + I )^-n)/i)

ON PERIODS

NK Y THAT CREDITS 6% MONTHLY FOR 6 MONTHS . HOW MUCH MONEY DOES HE HAVE AT THE END OF 6 MONTHS ?

3500*(((1+.005)^6 -1 )/.005)

S 21264.26

ODUCT WHICH CAN BE PURCHASED BY PAYING A DOWN PAYMENT OF P 5000 AND P 2500 PAYABLE AT THE END OF EACH QUARTER

j 0.045 i 0.01125

m 4 n 11
 2500*(( 1 - (1+ .01125)^-11 )/.01125 ) + 5000 A 30730.8

AN ANNUITY OF P 2000 PAYABLE AT THE END OF EACH MONTH FOR 2 YEARS. MONEY IS WORTH 6% COMPOUNDED MONTHLY .

FINAL AMOUNT

S 2000*(((1+.005)^24 - 1 )/.005)

S 50863.91

PRESENT VALUE

A 2000*(( 1 -(1+.005)^-24)/.005)

A 45125.73
OF 6 MONTHS ?

THE END OF EACH QUARTER FOR 2 YRS AND 9 MONTHS . THE MONEY

t 2.75

A ?
COMPOUNDED MONTHLY .
FINDING THE REGULAR PAYMENT OR PERIODIC PAYMENT

FINAL AMOUNT

R (S*i)/((1+i)^n -1)

1. HOW MUCH MONEY MUST MS. F PAY EVERY END OF THE YEAR FOR 3 YEARS AND 6 MONTHS IN
OF P 150000 FOR ADDITIONAL CAPITAL IN HER RETAILING BUSINESS ?

GIVEN :

t 3.5 j 0.1

0.5 m 1

2. MS. K PLANS TO TRAVEL ABROAD WITH HER FAMILY . WHAT AMOUNT SHOULD SHE SAVE AT THE
P 250000 THAT SHE NEEDS FOR HER PLAN ?

GIVEN :

S 250000

j 0.0144

m 12

i 0.0012

t 3 yrs

n 36

R ?
 PRESENT VALUE

R ( A*i)/( 1 - (1+i)^-n)

R 3 YEARS AND 6 MONTHS IN A BANK THAT CHARGES 10% PER ANNUM ON A COMMERCIAL LOAN IF SHE WANTED TO AVAIL NOW O

i 0.1 A 150000

n 3.5

NT SHOULD SHE SAVE AT THE END OF EACH MONTH IN A BANK THAT CREDITS 1.44% COMPOUNDED MONTHLY FOR 3 YEARS IN ORD

R (250000*0.0012)/((1+.0012)^36 - 1 )

R 6799.69
E WANTED TO AVAIL NOW ON A LOAN

R (150000*0.1)/( 1 -(1+.10)^-3.5)

R 52882.18

ONTHLY FOR 3 YEARS IN ORDER TO ACCUMULATE THE

FINDING THE PERIODIC PAYMENT OR REGULAR INVESTMENT ANNUITY DUE

FINAL AMOUNT

R = SD/ ((((1+i)^(n+1) - 1 )/i) - 1 )

DETERMINE THE AMOUNT THAT MS. A WILL DEPOSIT EVERY BEGINNING OF THE MONTH , IN BANK Z

GIVEN :

SD 500000

j 0.0234

m 12

i 0.00195

MR. K AGREES TO PAY A MONTHLY AMORTIZATION EVERY BEGINNING OF THE MONTH FOR 25 YEAR
FROM PAG IBIG FUND . IF THE PRIVATE INSTITUTION CHARGES 6% COMPOUNDED MONTHLY , FIND H

GIVEN :

AD 4000000 t 25 yrs

j 0.06 n 300

m 12 R ?

i 0.005
 ANNUITY DUE

PRESENT VALUE

R = AD/((( 1 - ( 1+I ) ^ -(n-1))/i) +1

G OF THE MONTH , IN BANK Z THAT CREDITS 2.34% COMPOUNDED MONTHLY , FOR 5 YEARS IN ORDER TO HAVE P 500000 AND START

t 5 yrs

n 60 R 7848.147

R ?

OF THE MONTH FOR 25 YEARS TO PAY THE HOUSE AND LOT WORTH P 4000000 THAT HE ACQUIRED
POUNDED MONTHLY , FIND HIS MONTHLY PAYMENTS .

R 25643.84

7693151 3693151
O HAVE P 500000 AND START A BUSINESS OF HER OWN .
FINDING THE DEFERRED ANNUITY

DA = R*(((1+I)^(n+d) - 1)/i) - R*((( 1+I )^d - 1 )/i)

where :

DA DEFERRED ANNUITY

d DEFERMENT PERIOD

n TIME WITH PAYMENTS

i INTEREST PER CONVERSION PERIOD

DETERMINE THE PRESENT VALUE OF A DEFERRED ANNUITY WHICH WILL BE REPLACED BY A SERIE
WITH THE FIRST PAYMENT IS DUE AT THE END OF 3 YEARS AND THE LAST PAYMENT WILL BE AT TH

GIVEN :

R 3000 d 2

j 0.0275 n 6

m 1

i 0.0275

WHAT IS THE CASH VALUE OF AN ITEM THAT CAN BE BOUGHT FOR P 2000 DOWNPAYMENT AND 8 M
INTEREST ) THROUGH CREDIT CARD . THE FIRST PAYMENT IS DUE AFTER 3 MONTHS FROM TODAY . M
 LL BE REPLACED BY A SERIES OF EQUAL ANNUAL PAYMENTS OF P 3000 EACH
AST PAYMENT WILL BE AT THE END OF 8 YEARS , MONEY IS WORTH 2.75% ANNUALLY.

00 DOWNPAYMENT AND 8 MONTHLY PAYMENTS OF P 850 ( INCLUSIVE OF THE RATE OF

3 MONTHS FROM TODAY . MONEY IS WORTH 2.4% COMPOUNDED MONTHLY .
PERIODIC PAYMENT OF A DEFERRED ANNUITY

R = DA/ (((1 +I )^(n+d) -1)/i) - (((1+i)^d - 1 )/I )

MR. N AVAILS THE LOAN OFFERED BY HIS COMPANY WITH A MINIMAL INTEREST OF 1.5%
DISCHARGE HIS LOAN BY PAYING A SERIES OF 10 EQUAL SEMI - ANNUAL PAYMENTS . THE
AMOUNT SHOULD HE PAY EVERY 6 MONTHS ?

THE OWNER OF ARC COMPANY BORROWS P 5000000 FROM BANK A . HE AGREES TO P

FIRST PAYMENT IS DUE AT THE END OF 9 MONTHS FROM TODAY . FIND THE QUARTERLY P
 MINIMAL INTEREST OF 1.5% EVEREY 6 MONTHS . HE BORROWS P 150000 AND AGREES TO
I - ANNUAL PAYMENTS . THE FIRST PAYMENT IS DUE AT THE END OF 2YEARS . WHAT

M BANK A . HE AGREES TO PAY HIS LOAN BY MAKING 12 QUARTERLY EQUAL PAYMENTS . HIS
DAY . FIND THE QUARTERLY PAYMENTS IF MONEY IS WORTH 5% COMPOUNDED QUARTERLY .
FINAL AMOUNT AND PRESENT VALUE OF AN ANNUITY DUE

FINAL AMOUNT

SD R*(((1+i)^n+1-1)/i)-R

1. AN INVESTMENT OF P 1500 IS MADE AT THE BEGINNING OF EACH YEAR FOR 8 YEARS . FIND THE

GIVEN :
R 1500 j

t 8 yrs. m

2. A MACHINE CAN BE BOUGHT FOR P 4000 DOWN PAYMENT AND 8 EQUAL MONTHLY PAYMENTS
FIND THE CASH EQUIVALENT OF THE MACHINE .

GIVEN :
DP 4000 n 8
R 1200
j 0.06 A ?
m 12
i 0.005

3. FIND THE PRESENT VALUE OF AN ANNUITY OF P 5000 PAYABLE EVERY BEGINNING OF EACH QUA

GIVEN :

R 5000 t

j 0.04 n

m 4
AD
i 0.01
 PRESENT VALUE

AD R*((1-(1+i)^-(n-1)/i) + R

EAR FOR 8 YEARS . FIND THE TOTAL INVESTMENT AT THE END OF THE TERM IF MONEY IS WORTH 4.6% COMPOUNDED ANNUALLY

0.046 i 0.046 SD

1 n 8

SD ?

EQUAL MONTHLY PAYMENTS OF P 1200 PAYABLE EVERY BEGINNING OF THE MONTH . IF MONEY IS WORTH 6% COMPOUNDED MO

AD 1200*((1 - (1+.005)^-(8-1))/.005) +1200

AD 9434.489

CASH VALUE 13434.49 P 13434.49

RY BEGINNING OF EACH QUARTER FOR 4 YEARS . IF MONEY IS WORTH 4% COMPOUNDED QUARTERLY .

4 yrs.
AD 74325.26
16

?
% COMPOUNDED ANNUALLY .

1500*(((1+.046)^(8+1) -1)/.046 ) - 1500

14769.89

ORTH 6% COMPOUNDED MONTHLY.