GEN MATH

2 QTR
ND
Annuity ,Business and
Consumer Loans and
Amortization
Learning Outline :
1. Identify and define the different
kinds of annuities
2. Differentiate Business and Consumer
Loans
3. Define Amortization
Annuity
Annuity Certain- when a specific amount of
payments are set to begin and end at a specific
length of time

Annuity Uncertain/ Contingent Annuity - a

person is paying according to a specific event in
which the start of payment and the amount of
payment is dependent on that event
A. Annuities based on Payment Dates

1. Ordinary Annuity- equal payments are made

at the end of each payment interval
ex. bonds , monthly rent

2. Annuity Due - periodic payments are made are

made at the beginning of each payment interval
ex. paying a loan at the beginning of every year
for 3 years
B. Annuity Based on Compounding Periods

1. Simple Annuity- the term used for annuities

whose payment or receipt period is the same as
the interest period
a. Ordinary Simple Annuity- payments or
receipts made at the end of the compounding
period and same interest period
ex. Payment of Php100.00 at the end of every
month for 4 years at 6% compounded monthly
B. Annuity Based on Compounding Periods

b. Simple Annuity Due- payments or receipts

made at the beginning of compounding period
and same interest period

ex. Receipt of Php100.00 at the beginning of

every month for 4 years at 6% compounded
monthly
B. Annuity Based on Compounding Periods

2. General Annuity- the term used for annuities

whose payment or receipt period does not
coincide with the interest period

a. Ordinary General Annuity- payments or

receipts made at the end of the compounding
period and is not the same with interest period
ex. Payment of Php100.00 at the end of every
month for 4 years at 6% compounded semi-
annually
B. Annuity Based on Compounding Periods

b. General Annuity Due- payments or receipts

made at the beginning of compounding period
and is not the same with interest period

ex. Payment of Php100.00 at the beginning of

every month for 4 years at 6% compounded
semi-annually
C. Annuity Based on Payments Schedule

I. Perpetuity - an annuity which has an infinite

payment or receipt period , wherein payments and
receipts extend indefinitely
Examples are scholarship from endowment and
irredeemable investments.
C. Annuity Based on Payments Schedule

II. Simple Deferred Annuity - an annuity which

the first payment or receipt is deferred after a
certain period of time
Business and Consumer Loan

Consumer Loan - an amount of money lent to an

individual for personal purposes

Business Loan - loans made by an individual to ir

corporate entity for the purpose of initiating ,
operating, subsidizing a business
Amortization

Amortization is defined as combined payment of

principal and interest in sequence
of equal installment payment over a period of
time. Equal installment is consisting of interest
due and portion of the principal. The outstanding
principal which is also defined as remaining
liability or balance.
Identify if the given is aCONSUMER or
BUSINESS LOAN
LOAN
1. home improvement CONSUMER LOAN
2. term loans BUSINESS LOAN
3. expansion projects BUSINESS LOAN
4. credit lines CONSUMER LOAN
5. purchase of goods CONSUMER LOAN
6. rehabilitation projects BUSINESS LOAN
7. car loan CONSUMER LOAN
8. educational loan CONSUMER LOAN
9. relocation projects BUSINESS LOAN
10. small business programBUSINESS LOAN
End of Session

Thank you!