ANNUITY

A Sequence of payments made at equal (fixed) intervals or period of time.

Annuities may be classified in different ways, as follows.
a. Terms of an annuity (t) –time between the first payment interval and last
payment interval.
b. Regular or Periodic payment (R)- the amount of each payment.
c. Amount ( future value) of an annuity(F)- sum of future values of all the
payments to be made during the entire term of the annuity.
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WHERE:

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Given:
R= Periodic payment
i= nominal rate
m=frequency conversion
t= time in years
PROBLEM SOLVING

1. Suppose Mrs. Reyes would like to save php 3,000 every month in a fund
that gives 9% compounded monthly. How much is the amount or future value
of her savings after 6 month?
Given:
R=3,000 R= 3,000
i=9% or 0.09 n=6
m=12 j=0.0075
t= 0.5
SOLUTION:

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2. In order to save for her Senior High graduation , Maria decided to save php
200 at the of each month. If the bank pays 0.25% compounded monthly, How
much will her money be at the end of 6 years?
Given: R= 200 n=mt
i= 0.25% or 0.0025 n=(12)(6)
m=12 n=72
t=6
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ANNUITY WHEN PRESENT VALUE IS MISSING
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FORMULA:
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PROBLEM SOLVING

1.Suppose Mrs. Garcia would like to know the present value of her monthly
deposit of php 3,000 when interest is 9% compounded monthly. How much is
the present value of her savings at the end of 6 months.
Given:
R=3,000 R= 3,000
i=9% or 0.09 n=6
m=12 j=0.0075
t=0.5
SOLUTION
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• 2. Mr. Reyes paid php 200,000 as down payment for a car. The remaining
amount is to be settle by paying php 16,200 at the end of each month for 5
years. If interest is 10.5 % compounded monthly, what is the cash price of his
car?
Given: n=mt
R= 16, 200 n=(12)(5)
i=10.5 % or 0.105 n=60
m=12
t=5
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