BBA 121 (Week 10)

Annuities
A sequence of payments made over a period of time.

Annuity Regular: A type of annuity in which payments are made at the end of a payment period.
Annuity Due: A type of annuity in which payments are made at the end of a payment period.

Future Value of Annuity Regular

(1 + 𝑖)𝑛 − 1
𝐹. 𝑉 (𝐴. 𝑅) = 𝑃 [ ]
𝑖

Future Value of Annuity Due

(1 + 𝑖)𝑛 − 1
( )
𝐹. 𝑉 𝐴. 𝐷 = 𝑃 [ ] x (1 + 𝑖)
𝑖
Example:
1. Find the future value of an annuity of K5,000 made annually for 7 years at an interest of
14% compounded quarterly.

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Present Value of Annuity Regular
1 − (1 + 𝑖)−𝑛
𝑃. 𝑉 (𝐴. 𝑅) = 𝑃 [ ]
𝑖

Present Value of Annuity Due

1 − (1 + 𝑖)−𝑛
𝑃. 𝑉 (𝐴. 𝑅) = 𝑃 [ ] x (1 + 𝑖)
𝑖

Exercise
1. Suppose K5,000 is paid every year for 10 years to pay off a loan. What is the amount if interest
is 14% per annum compounded annually?
 BBA 121 (Week 10)

Business Equations
Linear Equations: An equation of degree 1 is known as a linear equation
Example:
Evaluate the following.
𝑥+4 𝑥−5
1. + = 11
4 3

12𝑥+1 15𝑥+1 2𝑥+5

2. = −
4 5 3𝑥−1

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Simultaneous Equations in Two Unknowns

Example:
𝑥 𝑦
1. + =2, 𝑥 + 2𝑦 = 8
2 3

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Simultaneous Equations in Three Unknowns

Evaluate the following:
1) 2x – y + z = 3 , x + 3y – 2z = 11 , 3x – 2y + 4z = 1

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Quadratic Equations: These are equations of degree 2.

Example:
Evaluate the following:
6𝑥 6(𝑥+1)
1) + = 13
𝑥+1 𝑥
 BBA 121 (Week 10)

Cubic Equations: These are equations of degree 3.

Example:
Evaluate the following:
1) 𝑥 3 − 7𝑥 + 6 = 0