DEFERRED ANNUITY

 It is an annuity in which the first payment

is not made at the beginning nor at the end
of the payment interval but at a later date.

 The length of time when these payments

are made is called the period of deferment.
 DEFERRED ANNUITY
PRESENT
VALUE
FUTURE
VALUE

where
regular or periodic payment;
periodic rate, given by , where is the interest rate and is the number
of compounding periods within a year; and
total number of conversion periods for the whole term,
given by , where is the length of the term in years.
number of deferred periods
EXAMPLE 1 Find the present value of 10 semiannual payments of
₱2,000 each if the first payment is due at the end of 3 years and money
is worth 8% compounded semiannually.
Given:
EXAMPLE 2

Find the present value of a deferred

annuity of ₱1,500 every 3 months for 8
years that is deferred 3 years if money is
worth 6% converted quarterly.
EXAMPLE 3

A deferred annuity is purchased that

will pay ₱5,000 per quarter for 10 years
after being deferred for 5 years and with
interest rate of 6% compounded quarterly.
What is the present value of the annuity?
CHALLENGE 2.4

A house sells for ₱1,000,000 down

payment and 10 annual payments of
₱120,000 each. If the first payment is
deferred for 4 years, find the cash price if
money is worth 10% compounded
annually.