Periodic Payment given the Present Value A

é1 - (1 + i ) ù
-n
Ai
A = Rê ú®R= -n
ë i û 1 - (1 + i )
Periodic Payment given the Amount S

é (1 + i ) - 1ù
n
Si
S = Rê ú®R=
ë i û (1 + i ) - 1
n
 Example 3.6
Mrs. Anonas acquired a loan of P50,000 from a credit
union that charged an interest of 16% compounded
quarterly. She promised to settle her obligation by making
quarterly payments for 3 years. Find her quarterly payment.
Given: A = P50,000; j = 0.16; t = 3; m = 4; n = 12; i = 0.04
Required: R
Solution:
Ai 50000(0.04)
R= -n
®R= -12
1 - (1 + i ) 1 - (1.04)
R = P5,327.61
 Example 3.7
To create a fund for the purchase of a brand new car,
Frances will make equal monthly deposits to a bank that
pays [4%, m = 12] for 5 years. If she intends to buy a car
that will cost her P700,000, how much should she deposit
monthly to the bank.
Given: S = P700,000; j = 0.04; t = 5; m = 12; n = 60; i = 0.0033
Required: R
Solution:
Si 700000(0.00 3 3 )
R= ®R=
(1 + i ) - 1
n
(1 + 0.00 3 3 ) - 1
60

R = P10,558.23
Self-Check Exercise 3.5
Mrs. Cristina Joaquin borrows P50,000 and agrees to
discharge her liability as to principal and interest by paying
equal sums at the end of each 6 months for 8 years. If
money is worth 6 ½% compounded semi-annually, how
much is her semi-annual payment?

At the end of each year for 10 years, LMN Corporation will

deposit equal sums to a depreciation fund to provide for the
replacement of its machinery worth P500,000. If the fund
accumulates at 2% effective rate, how much must the
corporation deposit?
 Self-Check Exercise 3.5
Mrs. Cristina Joaquin borrows P50,000 and agrees to
discharge her liability as to principal and interest by paying
equal sums at the end of each 6 months for 8 years. If
money is worth 6 ½% compounded semi-annually, how
much is her semi-annual payment?
Given: A = P50,000; j = 0.065; t = 8; m = 2; n = 16; i = 0.0325
Required: R
Solution:
Ai 50000(0.0325)
R= -n
®R= -16
1 - (1 + i ) 1 - (1.0325)
R = P4,057.0066
 Self-Check Exercise 3.5
At the end of each year for 10 years, LMN Corporation will
deposit equal sums to a depreciation fund to provide for the
replacement of its machinery worth P500,000. If the fund
accumulates at 2% effective rate, how much must the
corporation deposit?
Given: S = P500,000; w = 0.02; t = 10; m = 1; n = 10; i = 0.02
Required: R
Solution:
Si 500000(0.02)
R= ®R=
(1 + i ) - 1
n
(1 + 0.02) - 1
10

R = P45,663.2639
Solving for time t given the Present Value A

é1 - (1 + i ) ù
-n
A = Rê ú
ë i û
æ Ai ö æ Ai ö
logç1 - ÷ logç1 - ÷
è Rø è Rø
n=- ®t =-
log(1 + i ) m log(1 + i )
Solving for time t given the Amount S
é (1 + i ) - 1ù
n
S = Rê ú
ë i û
æ Si ö æ Si ö
logç1 + ÷ logç1 + ÷
è Rø è Rø
n= ®t =
log(1 + i ) m log(1 + i )
 Example 3.8
Mrs. Gina Joaquin needs a fund of P900,000 to expand
her house. To provide for this, she will place P10,000 at the
end of each month in an investment that pays [16%, m =
12]. (a) When will the fund accumulate to at least
P900,000? (b) How many full investments of P10,000 are
required? (c) How much must be added to the accumulated
investment on the last month to complete the P900,000
needed for the expansion of the house? (d) How much
must be added to the last regular deposit of P10,000 to
complete the P900,000 on that date?
Given: S = P900,000; R = P10,000; j = 0.16; m = 12; i = 0.0133
Given: S = P900,000; R = P10,000; j = 0.16; m = 12;
i = 0.0133
Required:
(a)t
(b)Number of full investments of P10,000
(c)The amount of money that must be deposited on the last
month to complete the P900,000 needed for the repair of
the house
(d)The amount of money that must be added to the last
regular deposit to complete the P900,000 on that date
Given: S = P900,000; R = P10,000; j = 0.16; m = 12;
i = 0.0133
Solution:
(a) n æ æ 0.04 ö ö
ç 900000ç ÷÷
ç è 3 ø÷
log 1 +
æ Si ö ç 10000 ÷
logç1 + ÷ ç ÷
è Rø è ø
n= =
log(1 + i ) æ 0.04 ö
logç1 + ÷
è 3 ø
n = 59.53
t = n / m = 59.53 / 12 = 4.9608 years
Given: S = P900,000; R = P10,000; j = 0.16; m = 12;
i = 0.0133
Solution:
(b) Number of full investments of P10,000

The integral part of n is 59, thus the number of full payments

is 59.
Given: S = P900,000; R = P10,000; j = 0.16; m = 12;
i = 0.0133
Solution:
(c) The amount of money that must be deposited on the last month to complete
the P900,000 needed for the repair of the house

Let x be the amount needed to complete the P900,000 on the 60th month.
æ 0.04 ö
S59 ç1 + ÷ + x = 900000
è 3 ø
é æ 0.04 ö59 ù
ê ç1 + ÷ - 1ú
ê è 3 ø ú æ 0.04 ö
10000 ç1 + ÷ + x = 900000
ê 0.04 úè 3 ø
ê 3 ú
ë û
Given: S = P900,000; R = P10,000; j = 0.16; m = 12;
i = 0.0133
Solution:
(c) The amount of money that must be deposited on the last month to complete
the P900,000 needed for the repair of the house

Let x be the amount needed to complete the P900,000 on the 60th month.

æ 0.04 ö
888508.38ç1 + ÷ + x = 900000
è 3 ø
900355.16 + x = 900000
x = 900000 - 900355.16
x = - P355.16
Given: S = P900,000; R = P10,000; j = 0.16; m = 12;
i = 0.0133
Solution:
(d) The amount of money that must be added to the last
regular deposit to complete the P900,000 on that date

S59 + x = 900000
888508.38 + x = 900000
x = 900000 - 888508.38
x = P11491.62
 Solving for Rate j
IfAisgiven,
æ nR ö
(n - 1)i + 6(n + 1)i + 12ç1 -
2 2
÷=0
è Aø
IfSisgiven,
æ nR ö
(n - 1)i - 6(n - 1)i + 12ç1 -
2 2
÷=0
è S ø
ai 2 + bi + c = 0
- b ± b 2 - 4ac
i=
2a
j
i=
m
 Example 3.9
If deposits of P500 made at the end of each month for 4
years accumulate to P25,465.60, find the rate at which
money accumulates monthly.
Given: S = P25,465.60; R = P500; t = 4; m = 12; n = 48
Required: j
Solution:
æ nR ö
(n - 1)i - 6(n - 1)i + 12ç1 -
2 2
÷=0
è S ø
æ (48)(500) ö
(48 - 1)i - 6(48 - 1)i + 12ç1 -
2 2
÷=0
è 25465.60 ø
 Example 3.9
If deposits of P500 made at the end of each month for 4
years accumulate to P25,465.60, find the rate at which
money accumulates monthly.
Given: S = P25,465.60; R = P500; t = 4; m = 12; n = 48
Required: j
Solution:
2303i 2 - 282i + 0.69 = 0
- (-282) ± (282) 2 - 4(2303)(0.69)
i=
2(2303)
i = 0.12
i = 0.0025
 Example 3.9
If deposits of P500 made at the end of each month for 4
years accumulate to P25,465.60, find the rate at which
money accumulates monthly.
Given: S = P25,465.60; R = P500; t = 4; m = 12; n = 48
Required: j
Solution:
i = 0.12 i = 0.0025
é (1 + 0.12) 48 - 1ù é (1 + 0.0025) 48 - 1ù
S = 500 ê ú S = 500 ê 0.0025
ú
ë 0.12 û ë û
S = P995794.14 S = P 25465.60
j = (0.0025)(12) = 0.03
 End of Presentation

• “Great works are performed not by

strength but by perseverance”- Samuel
Jhonson