ORDINARY ANNUITY

FIND THE PRESENT VALUE AND AMOUNT AT THE END

OF THE TERM
ORDINARY ANNUITY

Is an annuity whose payment are made at the end of each

payment interval
Example: An annuity of $400 payable every end of the month for
7 years at 7% compounded monthly.
ICEBRAKER
OYRIDARN YANUITN

ORDINARY ANNUITY
PTNERSE UEVAL OF
AUINNYT
Present value of
annuity
FETUER UALVE OF
NNAIUYT

FUTURE VALUE
OF ANNUITY
PRESENT VALUE OF ANNUITY
FORMULA OF PRESENT VALUES OF SIMPLE
ORDINARY ANNUITY

R - Regular Payment
i - interest rate per period
n - number of payments
n=m.t r - nominal rate
m - number of conversion
period
t = time or how long the
money is deposited or
borrowed
Example:
1. Maria is paying ₱10000 every 3 months for 3 years for a loan she acquired. If
she is being charged an interest of 5% converted quarterly, how much was her
original loan?

Given
R= ₱10,000
m=4
t=3
n=m.t= 3(4)= 12
r= 0.05

i = 0.05
4
Example
Neneng works very hard because she wants to have enough money in her retirement account when she reach
the age of 60. She wants to withdraw ₱36,000.00 every 3 months for 20 years starting 3 months after she
retires. How much must Neneng deposit at retirement at 12% per year compounded quarterly for the
annuity.
FIND THE
PRESENT VALUE

P= ₱1,087,227.48
FUTURE VALUE OF SIMPLE ORDINARY ANNUITY

- The sum of all payments made and interest earned on

them at the end of the term of the annuities is called
future value of annuity, i.e., it is the total worth of all the
payments at the end of the term of an annuity
FORMULA FOR FUTURE VALUE OF ORDINARY
ANNUITY

R - Regular Payment
i - interest rate per period
n - number of payments
n=m.t r - nominal rate
m - number of conversion
period
t = time or how long the
money is deposited or
borrowed
Examples
1. Suppose Mrs. Remoto would like to save ₱3000 every month in a fund that gives
9% compounded monthly. How much is the amount or the future value of her savings
after 6 months.
Examples
1. In order to create a fund for his forth coming business venture, Elmer decides to
deposit ₱5000 by the end of each month. If the bank pays 4% compounded monthly
on his deposits, how much is in the fund at the end of 2 years?

Given:
R= ₱5000
r= 4% or 0.04
m= 12
t= 2 years
n= m.t=(12)(2)=24
i= r/m = 0.04/12 = 0.0033
SUMMARY

Ordinary annuity – payments made at the end of the period

 ACTIVITY

Direction: Solve the following problem using the formula of present and
future value of ordinary annuity

Present value of annuity

1. Virginia decides to invest for the future purposes after she retires. She wants to
withdraw ₱15,000 every 3 months for 18 years. How much must Virginia deposit at
retirement at 12% per year compounded quarterly for the annuity.
Future value of annuity
1. Elmer, who is planning to invest $10,000 annually for the next 10 years at a 5%
interest rate in order to save money that is adequate for his son’s education.