Shs Genmath q2 w3 Studentsversion v1
Shs Genmath q2 w3 Studentsversion v1
Quarter 2 – Module 3:
Simple Annuity
General Mathematics
Alternative Delivery Mode
Quarter 2 - Module 3: Simple Annuity
First Edition, 2020
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Michael R. Lee
Education Program Supervisor, Mathematics
Printed in the Philippines by the Schools Division Office of Makati City through the
support of the City Government of Makati (Local School Board)
What I Know
Choose the letter of the best answer. Write the chosen letter on a separate sheet of
paper.
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4. A cellular phone is purchased with ₱6 500 down payment and the balance will be
paid monthly at ₱1 500 for two years. What is the estimated cash price of the cellular
phone if money is worth 14% compounded monthly?
A. ₱31 000 C. ₱38 000
B. ₱35 000 D. ₱41 000
5. Refer to item number 4, how many payments must be made to pay off the cellphone
purchased?
A. 12 B. 24 C. 36 D. 48
Lesson
1 Simple Annuity
In the previous lesson, we were able to compute interest, maturity value, and
present value in compound interest environment, and solve problems involving
compound interest. The next lesson will focus on solving Simple Annuities.
What’s In
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Regular or Periodic payment (R) - the amount of each payment
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
Present value of an annuity (P) - sum of present values of all the payments
to be made during the entire term of the annuity
What’s New
Annuity Defined
Annuities may be classified in different ways, as follows:
1. according to payment interval and interest period;
2. according to time of payment; and
3. according to duration.
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Fill in the blank cell whichever applicable statement that will make each
statement correct on its corresponding type of annuity.
What is It
There are several ways on computing problems that involve Simple Annuities:
1. Amount (Future Value) of ordinary annuity;
2. Present Value of an Ordinary Annuity; and
3. Periodic payment R of an Annuity
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NOTE:
Example 1.1
In order to save for his senior high school graduation, Lee decided to save ₱500
at the end of each month. If the bank pays 3% compounded monthly, how much will
his money be at the end of 2 years?
SOLUTION: (Use the Formula for the Future value to be able to solve this problem and
follow the steps stated below).
2. What is being
asked?
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Example 1.2
Mr. Lemon paid ₱110 000 down payment for a car. The remaining accounts is to
be settled by paying ₱15 400 every month for 5 years. If interest is 15% compounded
monthly, how much is the cash value of the car?
SOLUTION: (Use the Formula for the Present Value to be able to solve this problem and
follow the steps stated below). Take note on how to solve the Cash Value.
2. What is being
asked?
4. Compute the
Present Value.
CASH VALUE
Cash Value = Down Payment + Present Value
Cash Value = ₱110 000 + ₱647 332.71
Cash Value = ₱757 332.71
What’s More
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What I Have Learned
1. I have learned that Annuities is a sequence of payments made at equal (fixed)
intervals or periods of time and may be classified in different ways, as follows:
a. according to payment interval and interest period;
b. according to time of payment; and
c. according to duration
2. There are different situations wherein Annuities are involved in solving real-
life problems. By deriving and manipulating the formula, one can solve what
is being asked in the problem.
3. The cash value or cash price of a purchase is equal to the down payment (if
there is any) plus the present value of the installment payments.
What I Can Do
1. Wes Lee started to deposit ₱3 000, quarterly, in a fund that pays 8% compounded
quarterly. How much will be in the fund after 10 years?
2. The buyer of a house and lot pays ₱200 000 cash and ₱10 000 every month for
20 years. If money is 9% compounded monthly, how much is the cash value of
the lot?
3. How much is the monthly amortization on an automobile loan of ₱900 000 to be
amortized over a 5-year period at a rate 9.5% compounded monthly?
4. Ken is paying ₱2 500 every 3 months for the amount he borrowed at an interest
rate of 8% compounded quarterly. How much did he borrow if he agreed that the
loan would be paid in 2 years and 6 months?
5. A store advertises a motorcycle for ₱3 000 down payment and ₱3 000
per month for 15 months. If the interest is 15% compounded monthly, what
is the actual value of the motorcycle?
Assessment
Multiple Choice. Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.
1. Which of the following describes annuity?
A. It is a series of unequal payments at regular intervals.
B. It is a series of equal payments at irregular intervals.
C. It is a series of equal payments at regular intervals.
D. None of the above
2. John spends ₱850 per month on cigarettes. If he stops smoking and invests the
same amount in a plan paying 15% compounded monthly, how much will he have
after 4 years?
A. ₱10 287.10 C. ₱55 444.13
B. ₱46 203.44 D. ₱670 507.71
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3. Which of the following does not represent annuity due?
A. car payment C. cellphone payment
B. rental payment D. pension payment
5. A cellular phone is purchased with ₱4 500 down payment and the balance will be
paid monthly at ₱1 750 for one year. What is the cash price of the cellular phone if
money is worth 13% converted monthly?
A. ₱21 000 C. ₱25 000
B. ₱24 000 D. ₱26 000
Additional Activities
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