ANNUITY

ANNUITY
- is a series of equal payments occuring at
equal periods of time.

MAY TATLONG URI NG ANNUITY:

1. Ordinary ANNUITY
2. EXACT ANNUITY
3. DEFERRED ANNUITY
 Sample
A recent government study reported that a
college degree is worth an extra P23,000 per
year in income (A) compared to what a high
school graduate makes. If the interest rate (i)
is 6% per year and you work for 40 years (N),
what is the future compound amount (F) of
this extra income

P3, 559,526, MAG COLLEGE NA!

What is the present worth and accumulated
amount of annuity paying P10,000 at the end of
each year, with interest of 15% compounded
annually?

P50,188 and P203,037

A debt of P5,000 which interest at 12%
compounded semi-annually is to be amortized
by equal semi-annual payments over the next
3 years, the first due in 6 months. Find the
semi-annual payment.

P1,016.82
A man bought an equipment costing $60,000
payable in 12 quarterly payments, each
instalment payable at the beginning of each
period. The rate of interest is 24%
compounded quarterly. What is the amount of
each payment?

$7100 pero sa libro, 7300

A certain property owner received two bids. The
first bidder offered to pay P400,000 each year
for 5 years, each payment to be made at the
beginning of each year. The second bidder
offered to pay P240,000 first year, P360,000
the second and P540,000 each year for the
next 3 years, all payments to be made at the
beginning of each year.
If the money is worth 20% compounded
annually, which bid should the company
accept?

Bid 1: P1, 435, 480. Bid 2: P1, 487,875, choose Bid 2

Deffered Annuity
 SAMPLE
On the day he was born, a man deposited to a trust
company a sufficient amount of money so that
the boy could receive five annual payments of
10,000 Php each for his college tuition fees,
starting on his 18th birthday. Interest rate of 12%
per annum was to be paid on all amounts on
deposit. There was also a provision that the
grandson could elect to withdraw no annual
payments and receive a single lump amount on
his 25th birthday. The grandson chose this option.
a) How much did the boy receive as the single
payment?
b) How much did the grandfather deposit?
89252.9 and 5250
If 10,000 is deposited each end year for 9 years,
how much annuity can a person get annually
from the bank every year for 8 years starting 1
year after 9th deposit is made. Cost of money
is 14%

34765
Suppose that a father, on the day his son is
born, wishes to determine what lump amount
would have to be paid into an account bearing
interest of 12% per year to provide
withdrawals of $2,000 on each of the son’s
18th, 19th, 20th, and 21st birthdays.

$884.76
A man borrowed $300,000 from a lending
institution which will be paid after 10 years at
an interest rate of 12% compounded annually.
If the money is worth 8% per annum, how
much should he deposit to a bank monthly in
order to discharge his debt 10 years hence?

$5172.8
 ASSIGNMENT NYO NA TO
A debt of P40,000, whose interest rate is 15%
compounded semi-annually, is to be
discharged by a series of 10 semi-annual
payments, the first payment to be made 6
months after consummation of the loan. The
first 6 payments will be P6,000 each, while the
remaining 4 payments will be equal and of
such amount that the final payment will
liquidate the debt. What is the amount of 4
payments?

P5,454
PERPETUITY
P = A/i
 SAMPLE
What is the present value of a money if you pay
$6000 annually with 15% interest per year
forever!

$40,000
What amount of money invested today at 15%
interest can provide the following
scholarships: $30,000 at the end of each year
for 6 years, $40,000 for the next 6 years and
$50,000 thereafter?
Uniform Arithmetic Gradient
 SAMPLE
A loan was to be amortized by a group of four
end-of-year payments forming an ascending
arithmetic progression. The initial payment
was to be P5,000 and the difference between
successive payments was to be P400. But the
loan was renegotiated to provide for the
payment of equal rather than uniformly
varying sums. If the rate of the loan was 15%,
what was the annual payment?

5,530.51