Review:

Determine if the given situation represent simple annuity or general

annuity
1. Payments are made at the end of each month for a loan that charges
1.05% interest compounded quarterly.
ANSWER:
GENERAL ANNUITY
2. A deposit of P5,500.00 was made at the end of every three months to an
account that earns 5.6% interest compounded quarterly.
ANSWER:
SIMPLE ANNUITY
Determine whether the situation describes an ordinary
annuity or an annuity due.
1. Jun’s monthly mortgage payment is P35,148.05 at the end of
each month.
ANSWER:
Ordinary Annuity
2. The rent for the apartment is P7,000.00 and due at the
beginning of each month.
ANSWER:
Annuity Due
Group activity:
Create the Annuity Chart flow and follow the direction provided
1. The top should be color yellow
2. The types should be color blue
3. The kinds should be color green
4. The classification should be color pink.
5. Indicate where the types, kinds and classifications should be
place at.
6. Post your work on the board as soon as you’re done!
 ANNUITY

Annuity Certain Types Annuity Uncertain

Simple Annuity Kinds General Annuity

GENERAL ORDINARY
Deferred Annuity
Ordinary Annuity ANNUITY Perpetuities

Classifications General Annuity

Annuity Due
Due
 Simple Annuity:
Deferred Annuity
OBJECTIVES:
DEFINE DEFERRED ANNUITY
*FIND THE FUTURE AND PRESENT VALUE OF DEFERRED ANNUITY
*SHOW UNDERSTANDING OF THE LESSON BY ANSWERING VARIED EXERCISES.
*
Deferred Annuity
- the first periodic payment is not made at the beginning nor
at the end of each payment interval, but some later date.
- the length of time when these payments are made is called
period of deferment.
The present value (PV) of a deferred annuity is given by the formula:

PV =
Where:
PV = Present Value
P = Regular or Periodic Payment
i = Rate per conversion period
i = ; r = Rate, m = Period
n = Number of paying periods
n = m(t); m = Period, t = Time
d = Number of deferred periods
The Future Value (FV) of a Deferred Annuity is given by the formula:

Fv = p·
Where:
FV = Future Value
P = Regular or Periodic Payment
i = Rate per Conversion Period
i = ; r = Rate, m = Period
n = Number of paying periods
n = m(t); m = period, t = time
Examples:
1. Find the present value of 10 semi-annual payments of P2,000.00 each if the first payment is due at
the end of 3 years and money is worth 8% compounded semi-annually.
2. Leah’s New Year’s resolution is to put P3,000.00 into the bank at the beginning of each quarter. If
the interest rate is 3% compounded quarterly, how much will Leah have if she will save for 3 years
and her first deposit starts at the end of 6 months?
3. Find the present value of a deferred annuity of P1,500.00 every 3 months for 8 years that is
deferred 3 years if money is worth 6% converted or compounded quarterly.
Exercise:
a. A deferred annuity is purchased that will pay P5,000 per quarter for 10 years after being deferred
for 5 years and with interest rate of 6% compounded quarterly. What is the present value of the
annuity?
b. Find the present value of a 2-year deferred annuity at 4% interest compounded quarterly with
payments of P1,000.00 made every quarter for 3 years.
Assignment:
1. Find the future value of an annuity 2.5
years after the last payment is made at 5%
interest semi annually with regular
semiannual payments of P4,500.00 for 10
years?