Las q2w3-4

Name of Learner: _______________________________________ Section:__________________
LEARNING ACTIVITY SHEETS

General Mathematics
S.Y. 2021 – 2022 1st Semester
2nd Quarter Week 3 & 4
Learning Competencies
The learner…
M11GM-IIc-1. illustrates simple and general annuities.
M11GM-IIc-2. distinguishes between simple and general annuities.
M11GM-IIc-d-1. finds the future value and present value of both simple annuities and general annuities.
M11GM-IId-2. calculates the fair market value of a cash flow stream that includes an annuity.
M11GM-IId-3. calculates the present value and period of deferral of a deferred annuity.
ANNUITY
An annuity is a sum of money that is paid in regular equal payments. Some examples of annuities are installment
payments, monthly rentals, and life insurance premiums.
Definition
Periodic Payment – Payment made in an annuity.
Payment Interval – The time between the successive payments dates of an annuity. The interval may be of any convenient
length like monthly, quarterly, semiannually, or annually.
Term – The interval between the beginning of the first payment period and the end of the last payment period.
Types of Annuity
1. Annuity Certain
It is an annuity payable for a definite duration. It means that this annuity begins and ends on a definite date.
2. Perpetuity
It is an annuity payable over a term that has a definite start date but no definite end date. An example of
perpetuity is housing rent.
3. Contingent Annuity
It is an annuity payable for an indefinite duration. It means that the beginning or the termination is dependent on
some certain event. Monthly payment of car loan and insurance are examples of annuity certain and contingent
annuity, respectively.
Kinds of Annuity Certain
1. Simple Annuity
It is an annuity certain whose compounding period is the same as the payment interval.
2. General annuity
It is an annuity certain whose compounding period is not the same as the payment interval. Both simple annuity
and general annuity can be classified as ordinary annuity or annuity due.
Classifications of Annuity
1. Ordinary Annuity
It is an annuity in which the periodic payment is made at the end of each payment interval.
2. Annuity Due
It is an annuity in which the periodic payment is made at the beginning of each payment interval.
Future Value of a Simple Ordinary Annuity Present Value of a Simple Ordinary Annuity
The future value (also called the amount) of an ordinary The present value of an ordinary annuity (PV) is the
annuity (FV) is the total of the payments and interest principal that must be invested today to provide the
earned at the end of the term. We use the following regular payments for the annuity. We use the following
formula to calculate the future value of an ordinary formula to calculate the present value of an ordinary
annuity: annuity:
(1 + 𝑖)𝑛 − 1 1 − (1 + 𝑖)−𝑛
𝐹𝑉 = 𝑅 [ ] 𝑃𝑉 = 𝑅 [ ]
𝑖 𝑖
Future Value of a Simple Annuity Due Present Value of a Simple Annuity Due
For the future value of an annuity due (𝐹𝑉𝐴𝐷 ), we use For the present value of an annuity due (𝑃𝑉𝐴𝐷 ), we
the following formula: use the following formula:
(1 + 𝑖)𝑛+1 − 1 1 − (1 + 𝑖)1−𝑛
𝐹𝑉𝐴𝐷 = 𝑅 [ − 1] 𝑃𝑉𝐴𝐷 = 𝑅 [ + 1]
𝑖 𝑖
where:
𝑅 = regular or periodic payment
𝑟
𝑖 = periodic rate, given by 𝑖 = , where 𝑟 is the interest rate and 𝑚 is the number of compounding or conversion period
𝑚
within a year.’
𝑛 = total number of conversion period for the whole term, given by 𝑛 = 𝑡 ∙ 𝑚, where t is the length of time in years.
Future Value of an Ordinary General Annuity Present Value of an Ordinary General Annuity
(1 + 𝑖)𝑛 − 1 1 − (1 + 𝑖)−𝑛
𝐹𝑉𝑂𝐺𝐴 = 𝑅 [ ] 𝑃𝑉𝑂𝐺𝐴 = 𝑅 [ ]
(1 + 𝑖)𝑐 − 1 (1 + 𝑖)𝑐 − 1
Future Value of General Annuity Due Present Value of General Annuity Due
(1 + 𝑖)𝑛 − 1 𝑖 1 − (1 + 𝑖)−𝑛 𝑖
𝐹𝑉𝐺𝐴𝐷 = 𝑅 [ ][ + 𝑖] 𝑃𝑉𝐺𝐴𝐷 = 𝑅 [ ][ + 𝑖]
𝑖 (1 + 𝑖)𝑐 − 1 𝑖 (1 + 𝑖)𝑐 − 1
where:
𝑚
𝑐= , 𝑚 is the number of compounding period and 𝑝 is the number of payments per year.
𝑝
𝑅 = regular or periodic payment
𝑟
𝑖 = periodic rate, given by 𝑖 = , where 𝑟 is the interest rate
𝑚
𝑛 = total number of conversion period for the whole term, given by 𝑛 = 𝑡 ∙ 𝑚, where t is the length of time in years.
Table of Conversion Period
Conversion Period Number of Conversion Period in a Year (𝑚)
Annually 1
Semi-Annually 2
Every 4 months 3
Quarterly 4
Monthly 12
Example
1. Determine if the given situations represent simple or general annuity.
a. Payments are made at the end of each month for a loan that charges 1.09% compounded yearly.
-General Annuity, since the payment interval (monthly) is not the same as the compounding period
(yearly).
b. A deposit of Php 8,063.61 was made at the end of each quarter to an account that earns 6.5% interest
compounded quarterly.
-Simple Annuity, because the payment interval (quarterly) is the same as the compounding period
(quarterly)
2. Determine whether the situation describes an ordinary annuity or an annuity due.
a. PJ’s monthly loan payment is Php 14,622 at the end of each month.
-Ordinary Annuity, because the payment was made at the end of the payment interval
b. The monthly payment for SMART Bro Internet is Php 699.00 at the beginning of each month.
-Annuity Due, since the payment was made at the beginning of the payment interval.
3. Solve the ff. problem:
a. If you pay Php 50.00 at the end of each month for 40 years on account that pays interest at 10% compounded
monthly, how much money do you have after 40 years?
Step 1: Determine the kind of the annuity. Step 2: Classify the annuity.
Simple Annuity, because the payment interval Ordinary Annuity, because the payment was
(each month) is the same as the compounding period made at the end of the payment interval.
(monthly).
Step 3: Identify if the desired outcome is Present Value or Step 4: Identify the formula that will be used.
Future Value. Future Value of Simple Ordinary Annuity
Future Value, since we are asked for the money (1 + 𝑖)𝑛 − 1
after 40 years. 𝐹𝑉 = 𝑅 [ ]
𝑖
Step 5: Identify the value of the variables Step 6: Substitute the variables by their values.
𝑅 = 50 𝑚 = 12 0.1 480
(1 + ) −1
𝑡 = 40 𝑛 = 𝑡𝑚 = (40)(12) = 480 𝐹𝑉 = 50 [ 12 ]
𝑟 = 10% 𝑜𝑟 0.1 𝑟 0.1 0.1
𝑖= = 12
𝑚 12
Step 7: Solve and write the final answer. (You may input what you have in STEP 6 in your calculator)
𝐹𝑉 = 𝑃ℎ𝑝 316,203.98
b. Prince’s parents saved for his college education by investing Php 12,000 at the beginning of each year in an
education plan that earns 6% interest compounded annually. What is the total amount of investment after 16
years?
Simple Annuity, because the payment interval Annuity Due, because the payment was made at
(each year) is the same as the compounding period the beginning of the payment interval.
(annually).
Future Value. Future Value of Simple Annuity Due
Future Value, since we are asked for the total (1 + 𝑖)𝑛+1 − 1
amount of investment after 16 years. 𝐹𝑉𝐴𝐷 = 𝑅 [ − 1]
𝑖
𝑅 = 12,000 𝑚=1 (1 + 0.06)16+1 − 1
𝐹𝑉𝐴𝐷 = 12000 [ − 1]
𝑡 = 16 𝑛 = 𝑡𝑚 = (16)(1) = 16 0.06
𝑟 = 6% 𝑜𝑟 0.06 𝑟 0.06
𝑖= = = 0.06
𝑚 1
𝐹𝑉 = 326,554.56
c. Find the present value of an annuity of Php 3,000 paid at the end of six months for 20 years if money is worth
6.24% converted semi-annually.
Simple Annuity, because the payment interval (six Ordinary Annuity, because the payment was
months) is the same as the compounding period (semi- made at the end of the payment interval.
annually).
Future Value. Present Value of Simple Ordinary Annuity
Present Value 1 − (1 + 𝑖)−𝑛
𝑃𝑉 = 𝑅 [ ]
𝑖
𝑅 = 3,000 𝑚=2 1 − (1 + 0.0312)−40
𝑃𝑉 = 3000 [ ]
𝑡 = 20 𝑛 = 𝑡𝑚 = (20)(2) = 40 0.0312
𝑟 = 6% 𝑜𝑟 0.0624 𝑟 0.0624
𝑖 = 𝑚 = 2 = 0.0312
𝐹𝑉 = 68,018.62
d. Find the present value of an ordinary annuity of Php 2,000 payable annually for 9 years if money is worth 5%
converted quarterly.
General Annuity, because the payment interval It is already stated that the classification is
(annually) is not the same as the compounding period Ordinary Annuity
(quarterly).
Future Value. Present Value of Ordinary General Annuity
Present Value 1 − (1 + 𝑖)−𝑛
𝑃𝑉𝑂𝐺𝐴 = 𝑅 [ ]
(1 + 𝑖)𝑐 − 1
𝑅 = 2,000 𝑚=4 1 − (1 + 0.0125)−36
𝑃𝑉𝑂𝐺𝐴 = 2000 [ ]
𝑡=9 𝑛 = 𝑡𝑚 = (9)(4) = 36 (1 + 0.0125)4 − 1
𝑟 = 0.05 𝑟 0.05 Step 7: Solve and write the final answer. (You may input
𝑖= = = 0.0125
𝑚 4 what you have in STEP 6 in your calculator)
𝑝=1 𝑚 4
𝑐= 𝑝 =1 𝑃𝑉𝑂𝐺𝐴 = 14,155.99
Deferred Annuity
Deferred annuity is an annuity in which the first payment interval is not made at the beginning nor end of the payment
interval, but at a later date. Deferral period is the length of time from the present to the beginning of the first payment
interval.
Example
Froilan bought a house to be paid ₱2500 every three months for 10 years deferred for 18 months. Find the present value
and the period of deferral if money is worth 10% interest compounded quarterly.
Step 1: Identify what is asked. Step 4: Substitute
Present Value (𝑃𝑉) and Period of Deferral (𝑑) (1 + 0.025)−5 − (1 + 0.025)−(40+5)
𝑃𝑉𝑑𝑒𝑓 = 2500 [ ]
0.025
Step 2: Identify what are given. Step5: Solve and write the final answer. (You may input
𝑅 = 2,500 𝑚=4 what you have in STEP 6 in your calculator)
𝑡 = 10 𝑛 = 𝑡𝑚 = (10)(4) = 40 𝑃𝑉𝑑𝑒𝑓 = 55467.99
𝑟 = 10% 𝑜𝑟 0.10 𝑟 0.10
𝑖 = 𝑚 = 4 = 0.025
𝑝 = 18 𝑚𝑜𝑠. = 1.5𝑦𝑟𝑠 𝑑 = 𝑚𝑝 − 1
𝑑 = 4(1.5) − 1 = 5
Step 3: Identify the formula that will be used.
(1 + 𝑖)−𝑑 − (1 + 𝑖)−(𝑛+𝑑)
𝑃𝑉𝑑𝑒𝑓 = 𝑅 [ ]
𝑖
Name of Learner: _______________________________________ Section: __________________
LEARNING ACTIVITY SHEETS

General Mathematics
S.Y. 2021 – 2022 1st Semester
2nd Quarter Week 3 & 4
Exercise.
Solve the ff. problems:
1. Ronald borrows money to buy a car. He will repay the loan by making monthly payments of Php 12,899 for the
next five years at an interest rate of 8% compounded monthly. How much did Ronald borrow?
Future Value.
𝑅= 𝑚=
𝑡= 𝑛 = 𝑡𝑚 =
𝑟
𝑟= 𝑖=𝑚=
2. Mario’s parents saved for his college education by investing Php 18,000 at the beginning of each year in an
education plan that earns 4% interest compounded annually. What is the total amount of investment at the end of
15 years?
Future Value.
𝑅= 𝑚=
𝑡= 𝑛 = 𝑡𝑚 =
𝑟
𝑟= 𝑖=𝑚=
3. Php 20,000 will be invested in an account at the end of each year at 6% compounded quarterly. How much will be
the money after 10 years?
Future Value.
𝑅= 𝑚=
𝑡= 𝑛 = 𝑡𝑚 =
𝑟 Step 7: Solve and write the final answer. (You may input
𝑟= 𝑖=𝑚=
what you have in STEP 6 in your calculator)
𝑚
𝑝= 𝑐= =
𝑝
4. Find the present value of an annuity due of Php 5000 payable monthly for 5 years if money is worth 8%
compounded annually.
Future Value.
𝑅= 𝑚=
𝑡= 𝑛 = 𝑡𝑚 =
𝑟 Step 7: Solve and write the final answer. (You may input
𝑟= 𝑖= =
𝑚 what you have in STEP 6 in your calculator)
𝑚
𝑝= 𝑐 =𝑝 =
5. Find the present value of 12 quarterly payments of Php 1,000 each if the first payment is due at the end of 1 year
and money is worth 3% compounded quarterly.
Step 1: Identify what is asked. Step 4: Substitute
Step 2: Identify what are given. Step5: Solve and write the final answer. (You may input
𝑅= 𝑚= what you have in STEP 6 in your calculator)
𝑡= 𝑛 = 𝑡𝑚 =
𝑟
𝑟= 𝑖=𝑚=
𝑝= 𝑑 = 𝑚𝑝 − 1
𝑑=
Step 3: Identify the formula that will be used.

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