Group 6

General Annuity
Definition, Formulas, Examples
 Agenda by the end of
the Discussion
1 2 3

Learn the learn the types of Be able to solve word

definition of general annuity problems relating to
general annuity and formula general annuity
 ACTIVITY:
A B
₱5 000.00 deposited ₱5 000.00 deposited
every month for 5 every month for 5
years at 8% per year years at 8% per year
compounded compounded semi-
monthly. annually.
 ACTIVITY:
A B
₱2 500.00 deposited ₱2 500.00 deposited
every year for 15 years every year for 30
at 10% per year years at 10% per year
compounded compounded semi-
annually. annually.
 ACTIVITY:
A B
₱1 500.00 deposited ₱1 500.00 deposited
every six months for every 5 months for 10
10 years at 6% per years at 6% per year
year compounded compounded
semi-annually. monthly.
Definition
 General Annuity
An Annuity where the payment interval is not
the same as the interest period.

General Ordinary Annuity

A general Annuity in which the periodic
payment is made at the end of the payment
interval.
 Examples:
Monthly installment payment of a car,
lot, or house with an interest rate that
is compounded annually.

Paying a dept semi-annually when the

interest compounded monthly.
 (2) Types of
General Annuity
 Future Value
of an annuity is the total accumulation of the
payments and interest earned.

Present Value
of an annuity is the principal that must be
invested today to provide the regular
payment of an annuity.
Formulas
Future Value Present Value
 Terms in
Formula:
C

R Regular Payment N total number of conversion

periods
Interest rate per period;
K n=tm
i=r/K
J/I Annual rate T number of years
number of conversion P/c, where p is the number of
M B
period in a year
months in a payment interval
and c is the number of months
in a compounding period.
 Word
Problems
 Situation 1:
Payment of ₱500.00 is made at each
year for 10 years. Interest has a
nominal rate of 8% convertible
quarterly. Find the present and the
future value.
 Situation 2:
Annual payments of ₱2,000.00 at the
end of each term for 8 years with
interest rate of 7% compounded
quarterly. Find the present and the
future value.
 Group 6

General Annuity
Definition, Formulas, Examples