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Quarter 2 - Module 4 GENERAL MATHEMATICS

This document discusses simple and general annuities. It defines annuities as a sequence of payments made at regular intervals, and describes simple annuities as those where the payment interval matches the interest compounding period. General annuities have payment intervals that are different from the interest compounding period. Examples of annuities include rental payments, pensions, car loans, and educational plans. The document provides learning activities for students to identify whether examples describe simple or general annuities, and to illustrate the cash flows of different annuity situations.

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Kristine Alcordo
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335 views

Quarter 2 - Module 4 GENERAL MATHEMATICS

This document discusses simple and general annuities. It defines annuities as a sequence of payments made at regular intervals, and describes simple annuities as those where the payment interval matches the interest compounding period. General annuities have payment intervals that are different from the interest compounding period. Examples of annuities include rental payments, pensions, car loans, and educational plans. The document provides learning activities for students to identify whether examples describe simple or general annuities, and to illustrate the cash flows of different annuity situations.

Uploaded by

Kristine Alcordo
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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11 SENIORHIGH

DAVAO INSTITUTE OF TECHNICAL EDUCATION, INC

GENERAL MATHEMATICS
QUARTER 2
Module 4 - Simple and General Annuities

Name:

Grade and Section:


Module 4 - Simple and General Annuities
This lesson will tackle first the definition and types of annuities and the difference between simple and compound
annuities. There are types of annuity according to correspondence of payment intervals with interest periods.

Simple Annuity - the payment interval is also the same as the interest period.
General Annuity - refers to an annuity where the length of the payment interval is not the same as the length of the
interest compounding period.

Annuity - a sequence of payments made at equal (fixed intervals or periods of time.

The following are examples of annuities:


● Rental payment
● Monthly pensions
● Monthly payment for car loan
● Educational plan

Annuities may be classified in different ways, as follows

In the activity, the payment is made at the end of each period.

Such an annuity is called an ordinary annuity.

Each payment in an annuity is called the periodic payment (R).

The time between the successive payment dates of an annuity is called the payment interval.

The time between the first payment interval and last payment interval is called the term of the annuity (t).

The sum of the future values of all the payments to be made during the entire term of the annuity is the future value or
the amount of an annuity (F).

The sum of the present values of all payments to be made during the entire term of the annuity is called the present
value of an annuity (P).

Annuities may be illustrated using a time diagram. The time diagram for an ordinary annuity is given below.

GENERAL MATHEMATICS | PAGE 1


Simple Annuity - the payment interval is also the same as the interest period.

Example 1. ₱ 50,000 deposited every year for 5 years at 8% per year compounded annually.

Solution: Notice that ₱ 50,000 was deposited every year and it is compounded annually. Since the compounding period
is similar to the payment interval, then this is a type of simple annuity.

The cash flow of the given situation can be illustrated in the time diagram below:

GENERAL MATHEMATICS | PAGE 2


GENERAL MATHEMATICS | PAGE 3
____________________________________________________

DAVAO INSTITUTE OF TECHNICAL EDUCATION, INC


General Mathematics
LEARNING ACTIVITY SHEET

Name: ___________________________________________________ Module #: _____________

Grade and Section: _________________________________________ Score: _______________


Quarter 2
Activity 1
Read each problem carefully and tell whether each of the given information describes a simple annuity or
general annuity. Complete the diagram that follows. Have Fun!

a. Monthly payments of ₱ 3,000 for 4 years with interest rate of 3% compounded monthly.
Type of Annuity: ________________

b. Quarterly payment of ₱ 5,000 for 10 years with interest rate of 2% compounded semi-annually.
Type of Annuity: ________________

GENERAL MATHEMATICS | PAGE 4


____________________________________________________

DAVAO INSTITUTE OF TECHNICAL EDUCATION, INC


General Mathematics
LEARNING ACTIVITY SHEET

Name: ___________________________________________________ Module #: _____________

Grade and Section: _________________________________________ Score: _______________


Quarter 2
Activity 2
Identify the type of annuity in the given situations below then show the illustration of the cash flow.
a. Monthly payments of ₱ 2,000 for 5 years with interest rate of 12% compounded annually.

b. Yearly payment of ₱15,000 for 10 years with interest rate of 8% compounded annually

GENERAL MATHEMATICS | PAGE 5

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