GENERAL MATHEMATICS

QUARTER 2
 SIMPLE
ANNUITY
Annuities may be classified in different ways,
as follows. ANNUITIES
Simple Annuity - an General Annuity - an
According to payment
annuity where the annuity where the
interval and interest
payment intervals is the payment intervals is not
period
same as the interest the same as the interest
period period

Ordinary Annuity (or Annuity Due -

According to time of Annuity Immediate) - a a type of annuity in
payment type of annuity in which which the payments are
the payments are made made at beginning of
at the end of each each payment interval
payment interval

Annuity Certain - an Contingent Annuity -

annuity in which an annuity in which the
According to duration
payments begin and end payments extend over
at definite times an indefinite (or
indeterminate) length of
time
SIMPLE ORDINARY ANNUITY
 Example 1. Determine if the given situations represents Simple
Annuity or General Annuity
A. Yearly payment of ₱15,000 for 10 years with interest rate of 8%
Compounded annually.
B. Monthly payments of ₱ 2,000 for 5 years with interest rate of 12%
compounded annually.
C. Payments are made at the end of each month for a loan that charges
2.5% interest compounded quarterly.
D. A deposit of Php. 5, 000.00 was made at the end of every three months
to an account that earns 5.6% compounded quarterly.
A. SIMPLE ANNUITY C. GENERAL ANNUITY
B. GENERAL ANNUITY D. SIMPLE ANNUITY
ORDINARY ANNUITY

ANNUITY DUE
 Example 3. Suppose Mrs. Vargas would like to
save Php 3,000.00 every month in a fund that
gives 9% compounded monthly. How much is the
amount or future value of her savings after 6
months?

The amount of this annuity is

Php 18, 340.89
 Example 4. In order to save for her high school
graduation, Mary decided to save
Php 200.00 at the end of each month. If the bank
pays 0.25%compounded monthly, how much will
her money be at the end of 6 years?

Mary will be able to save

Php 14,507.02 for her graduation.
The cash flow or cash price of a purchase is equal to the down payment (if there is any)
plus the present value of the installment payments.

Example 5. Mr. Ramos paid Php 200,000.00 as a

down payment for a car. The remaining amount
is to be settled by paying
Php 16,200.00 at the end of each month for 5
years. If interest is 10.5% compounded monthly,
what is the cash price of his car?

The cash price of the car is

Php 953, 702.20
 Example 6. Paolo borrowed Php 100,000.00. He
agrees to pay the principal plus interest by paying
an equal amount of money each year for 3 years.
What should be his annual payment interest if
interest is 8% compounded annually?

Paolo should pay

Php 38, 803.35 every year for 3 years.
TRY THESE!

1.

2.

3.
GENERAL
ANNUITY
FUTURE VALUE
Cris will have Php 290, 082.51 in the
fund after 15 years
The Teacher will be able to save Php
101, 197.06 after 10 years
Future Value = Php 189, 126.83
 PRESENT VALUE

P
Ken borrowed Php 100,000.00 from
Kat.
The cost of the TV set is Php 17, 545.08
 P = Php 17, 110.88
The cash price is lower than the
present value of the installment.
 Example 4. To accumulate a fund of
Php 500,000.00 in 3 years, how much should
Layla deposit in her account every 3 months if it
pays an interest of 5.5% compounded annually?

R = Php 38, 668.16

She must deposit in her account every
3 months.
TRY THESE!

1.

2.
A motorcycle is for sale Php 60,500.00 cash or on installment terms
3. Php3,000 per month for 2 years at 12% compounded annually. If you
were the buyer, what would you prefer, cash or installment?