GENERAL ANNUITY

 FUTURE VALUE

 PRESENT VALUE

 PERIODIC PAYMENT OR REGULAR

PAYMENT
 DEFINITION OF TERMS

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
 Example:
1. Monthly installment payment of a
car, lot, or house with an interest
rate that is compounded annually.

2. Paying a debt semi-annually when

the interest is compounded monthly.
 FORMULA:

FV=R

n=()(t)
where R is the regular payment
where i is the equivalent interest rate
per payment interval converted from
interest rate per period
where n is the number of payments
where r is the nominal rate

 is the length of compounding period

where t is the term of annuity
EXAMPLE#1:
1. Cris started to deposit ₱1,000 monthly, in a fund that pays
6% compounded quarterly. How much will be in the fund
after 15 years?
Given:
R= ₱1,000
=12
=4
t=15
= 0.06 Convert 6% compounded quarterly to its equivalent interest rate for monthly payment interval.

n= ()(t)
= (12)(15)
=180
=0.00497521
Find the future value.
FV=R
=1,000

F=₱290,082.51
EXAMPLE#2:
1. Teacher Ramos saves ₱5,000 every 6 months in a bank that
pays 0.25% compounded monthly. How much will her
savings after 10 years?
Given:
R= ₱5,000
=2
=12
t=10
= 0.0025 Convert 0.25% compounded monthly to its equivalent interest for each semi-annual payment interval.

n= ()(t)
= (2)(10)
=20
=0.00125065
Find the future value.
FV=R
=5,000

F=₱101,197.08
EXAMPLE#3:
1. BPI pays interest at the rate of 2% compounded quarterly.
How much will have in the bank at the end of 5 years if he
deposits ₱3,000 every moth?
Given:
R= ₱3,000
=12
=4
t=5
= 0.02 Convert 2% compounded quarterly to its equivalent interest rate for monthly payment interval.

n= ()(t)
= (12)(5)
=60
=0.00166390
Find the future value.
FV=R
=3,000

F=₱189,126.40