0% found this document useful (0 votes)
345 views10 pages

Shs Genmath q2 w3 Studentsversion v1

Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
345 views10 pages

Shs Genmath q2 w3 Studentsversion v1

Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 10

General Mathematics

Quarter 2 – Module 3:
Simple Annuity
General Mathematics
Alternative Delivery Mode
Quarter 2 - Module 3: Simple Annuity
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist in any work of the
Government of the Philippines. However, prior approval of the government agency or office
wherein the work is created shall be necessary for exploitation of such work for profit. Such
agency or office may, among other things, impose as a condition the payment of royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names, trademarks, etc.)
included in this module are owned by their respective copyright holders. Every effort has been
exerted to locate and seek permission to use these materials from their respective copyright
owners. The publisher and authors do not represent nor claim ownership over them.

Published by the Department of Education


OIC-Schools Division Superintendent: Carleen S. Sedilla CESE
OIC-Assistant Schools Division Superintendent and OIC-Chief, CID: Jay F. Macasieb DEM, CESE

Development Team of the Module

Writer: Guadaliza B. Villamor

Editor: Patricia Ulynne F. Garvida

Reviewer: Michael R. Lee

Layout: Ma. Fatima D. Delfin and Michiko Remyflor V. Trangia

Management Team: Neil Vincent C. Sandoval


Education Program Supervisor, LRMS

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)

Department of Education - Schools Division Office of Makati City

Office Address: Gov. Noble St., Brgy. Guadalupe Nuevo


City of Makati, Metropolitan Manila, Philippines 1212
Telefax: (632) 8882-5861 / 8882-5862
E-mail Address: [email protected]
This module was designed and written with you in mind. It is here to help master simple
and general annuities as well as deferred annuities, distinguish between simple and
general annuities, find the future and present values of simple annuities, compute the
periodic payment of a simple annuity. The scope of this module permits it to be used
in many different learning situations. The language used recognizes the diverse
vocabulary level of students. The lessons are arranged to follow the standard sequence
of the course. But the order in which you read them can be changed to correspond with
the textbook you are now using.

The module is divided into three lessons, namely:


 Lesson 1 – Simple Annuity
 Lesson 2 – General Annuity
 Lesson 3 – Deferred Annuity

After going through this module, you are expected to:


1. illustrate simple and general annuities;
2. distinguish between simple and general annuities;
3. find the future and present values of simple annuities;
4. compute the periodic payment of a simple annuity;
5. find the future and present values of general annuities;
6. compute the periodic payment of a general annuity;
7. calculate the fair market value of a cash flow stream that includes an
annuity; and
8. calculate the present value and period of deferral of a deferred annuity.

What I Know

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. Which of the following does NOT represent annuity due?


A. car payment C. cellphone payment
B. pension payment D. rental payment

3. Which of the following describes ordinary annuity?


A. Payment is required at the beginning of the period.
B. Payment is made at the end of the period.
C. The first payment interval is delayed for a period of time.
D. None of the above

3
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

For Items 6-10

Let R=regular payment, P=present value, m=frequency of conversion,


t=time in years, i m=nominal rate, j=rate per conversion period. Find what is the
unknown value in the problem.

GIVEN: P = P24 000, im =8%, t = 7 years, money is compounded quarterly

6. What is the value of m?


A. 1 B. 2 C. 4 D. 12

7. What is the interest rate per conversion period (j)?


A. j = 0.01 or 1% C. j = 0.04 or 4%
B. j = 0.02 or 2% D. j = 0.08 or 8%

8. How many periods are there to find P?


A. 28 B. 84 C. 14 D. 20

9. How much is the regular payment?


A. ₱1 127.75 C. ₱1 567.00
B. ₱1 440.31 D. ₱8 166.97

10. What is the total amount of interest?


A. ₱3 098 C. ₱7 577
B. ₱8 236 D. ₱8 068

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

Let us begin the lesson by unlocking definition of terms.

ANNUITY - a sequence of payments made at an equal (fixed) intervals or


periods of time.
Term of an annuity (t) - time between the first payment interval and last
payment interval

4
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.

5
Fill in the blank cell whichever applicable statement that will make each
statement correct on its corresponding type of annuity.

Write more examples in its corresponding column of Ordinary Annuity and


Annuity Due.

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

6
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).

1. What are the given


in the problem?

2. What is being
asked?

3. Plug-in the given


into the formula for
“Future Value”

4. Compute and solve


the problem

7
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.

1. What are the


given in the
problem?

2. What is being
asked?

3. Plug-in the given


into the formula
for “Future Value”

4. Compute the
Present Value.

5. Solve the Cash Value.

CASH VALUE
Cash Value = Down Payment + Present Value
Cash Value = ₱110 000 + ₱647 332.71
Cash Value = ₱757 332.71

The CASH VALUE of the car is ₱757 332.71

What’s More

Activity 1.1 Answer the following word problems on Simple


Annuities.
1. Monthly payment of ₱3 000 for 4 years with interest rate of 3% compounded
monthly.
2. Quarterly payment of ₱5 000 for 10 years with interest rate of 2% compounded
quarterly.
3. Semi-annual payment of ₱12 500 with interest rate of 10.5% compounded semi-
annually for 6 years.
4. Quarterly payment of ₱15 000 for 10 years with interest rate of 8% compounded
quarterly.
5. Monthly installment of an appliance cash prize of ₱20 000 for 6 months with an
interest rate of 6% compounded monthly.

8
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

Activity 1.2 Reinforcing Annuities in Different Situations

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

9
3. Which of the following does not represent annuity due?
A. car payment C. cellphone payment
B. rental payment D. pension payment

4. Which of the following describes ordinary annuity?


A. Payment is required at the beginning of the period.
B. Payment is made at the end of the period.
C. The first payment interval is delayed for a period of time.
D. None of the above

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

For Items 6-10


Let F=future value, P=principal, m=frequency of conversion, t=time in years,
im=nominal rate, j=rate per conversion period, Ic=compound interest. Find what
is the unknown value in the problem.

GIVEN: P = P10 000, im =12%, t = 5 years money is compounded monthly


6. What is the value of m?
A. 1 C. 4
B. 2 D. 12
7. What is the interest rate per conversion period (j)?
A. j = 0.01 or 1% C. j = 0.06 or 6%
B. j = 0.03 or 3% D. j = 0.004 or 0.4%
8. How much is the interest (Ic)?
A. ₱8 061.97 C. ₱13 506.75
B. ₱1.82 D. ₱8 166.97
9. How much must be repaid after 5 years (F)?
A. ₱10 001.82 C. ₱18 166.97
B. ₱18 061.11 D. ₱23 506.75
10. If the money is to be compounded quarterly, which of the following statement
is correct?
A. The interest is higher when compounded quarterly
B. The interest is lower when compounded quarterly
C. The interests of both are just equal
D. Cannot be determined

Additional Activities

Solve the following.

1. Shirl started to deposit ₱18 000 semi-annually in a fund that pays 5%


compounded semi-annually. How much will be in the fund after 10 years?
2. Kathrina wants to buy a lot, which costs 1 million pesos. She plans to give a down
payment of 20% of the cost, and the rest will be paid by financing at an annual
interest rate of 12% for 10 years in equal monthly installments? What will be the
monthly payment?

10

You might also like