Unit 13: Simple and General Annuities • Grade 11

Lesson 1
Simple Annuity

Table of Contents

Learning Competencies 2
Learning Objectives 2
Suggested Time Frame 2
Essential Questions 3
Prerequisite Skills and Topics 3
Lesson Proper 4
- A. Introduction 4
- B. Discussion 7
- C. Practice and Feedback 19
Performance Assessment 27
Synthesis 39
Bibliography 39

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 Unit 13: Simple and General Annuities • Grade 11

Unit 13 | Simple and General Annuities

Lesson 1: Simple Annuity

Learning Competencies

The learner
• illustrates simple and general annuities [M11GM-IIc-1]; and
• finds the future value and present value of both simple annuities and general
annuities [M11GM-IIc-d-1].

Learning Objectives

At the end of this lesson, the learner should be able to

• accurately illustrate real-life situations involving simple annuities;
• correctly determine if a real-life situation illustrates the future value or the present
value of a simple annuity;
• correctly determine if a real-life situation illustrates a simple ordinary annuity or a
simple annuity due; and
• correctly solve for the future value or the present value of a simple annuity.

Suggested Time Frame

2 hours1

1
Suggested time frame is based on the DepEd calendar for A.Y. 2018-2019 and the curriculum guide for mathematics (August
2016 version).

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 Unit 13: Simple and General Annuities • Grade 11

Essential Questions

At the end of this lesson, the student should be able to answer the following questions:
• What is a simple annuity?
• How will you know if the situation illustrates a future value or a present value of a
simple annuity?
• How will you know if the situation illustrates a simple ordinary annuity or a simple
annuity due?
• How will you solve for the future value or the present value of a simple annuity?

Prerequisite Skills and Topics

Skills:
• Changing percent to decimal
• Evaluating exponents
• Solving problems involving simple interest
• Solving problems involving compound interest

Topics:
• Math 5 Unit 13: Percent | Lesson 1: Percent
• Math 6 Unit 8: Exponents and Exponential Notation | Lesson 1: Exponent and the
Base
• General Mathematics Unit 12: Simple and Compound Interest | Lesson 2: Solving
Problems Involving Simple Interest
• General Mathematics Unit 12: Simple and Compound Interest | Lesson 4: Solving
Problems Involving Compound Interest

Teacher’s Notes
To help better gauge students’ readiness for this lesson, you may assign the short test
given in Test Your Prerequisite Skills section of the corresponding study guide.

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 Unit 13: Simple and General Annuities • Grade 11

Lesson Proper

A. Introduction

Suggested Warm-up Activities

Choose from any of the following warm-up activities. These warm-up activities should
either stimulate recall of previous lesson or introduce the lesson and not already used
in the study guide.

Activity 1: Duration: 10 minutes

Grow your Money!
Materials Needed: calculator, pen, and paper

This activity will help the Methodology:

students illustrate the 1. Show the students the following problem.
concept of annuity. • Suppose you deposit ₱1 000 in a bank every
end of the third month that pays 5% interest
compounded quarterly. How much money
will you have at the end of a year?

2. Ask the students to complete the table below by

following the steps. Guide them in solving the first
row and let them solve the rest.
Your Investment
Period Initial Interest Interest Periodic Sum at
Balance rate Payment the end
of the
period

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 Unit 13: Simple and General Annuities • Grade 11

a. Fill out the Period column with intervals of

three months.
b. Fill out the Interest Rate column with
0.05
4
= 0.0125 since the interest is
compounded quarterly.
c. Initial balance for the first three months is 0.
d. Find the interest of the balance.
e. The Periodic Payment column should have
₱1 000, which is given in the problem.
f. The last column should be the sum of Initial
balance, Interest, and Periodic payment.
g. On the second row, the initial balance
should be the “sum at the end of the
period” from the previous row.
h. Repeat this procedure until you reach the
last column.

Expected Results:
Your Investment
Sum at the
Initial Interest Periodic
Period Interest end of the
Balance Rate Payment
period
3rd
0 0.0125 0 ₱1 000 ₱1 000
month
6th
₱1 000 0.0125 ₱12.5 ₱1 000 ₱2 012.5
month
9th
₱2 012.5 0.0125 ₱25.16 ₱1 000 ₱3 037.66
month
12th
₱3 037.66 0.0125 ₱37.97 ₱1 000 ₱4 075.63
month

Guide Questions:
1. How much is the accumulated amount of money?
2. Do you think that your investment will grow larger
this way rather than saving it in a piggy bank? Why
do you think so?

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 Unit 13: Simple and General Annuities • Grade 11

Activity 2: Duration: 10 minutes

Guess the Number!
Materials Needed: calculator

This activity will help the Methodology:

students illustrate the 1. Divide the class into groups with 10 members
concept of annuity. each.
2. Ask them to line up facing the board. Each student
must bring a calculator.
3. Inform them that you will give a number to the
first person in the line. When you say “Go,” the first
person should pass the number to the next person
in the line. Note that the first student in the line
has to pass the number only. The recommended
number to give is 1 000.
4. The next person should add 2% of that number
and then add the given number (1 000) again.
Round the answer off to the nearest two decimal
places. He or she should then pass it to the next
person in the line.
5. Have them continue this process until the last
student in the line
6. The last person should also do the same and
inform the teacher of their answer.
7. The first group to give the correct answer wins.

Expected Results:
Student Number Student Number
1 1 000 6 6 308.12
2 2 020 7 7 434.28
3 3 060.4 8 8 582.97
4 4 121.61 9 9 754.63
5 5 204.04 10 10 949.72

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 Unit 13: Simple and General Annuities • Grade 11

Guide Questions:
1. What do you think is the kind of interest illustrated
in this game?
2. Do you think the money earned in this way is
larger than compound interest or simple interest?
In what way?

Teacher’s Notes
A suggested warm-up activity with ICT integration is available in the presentation file
that you can download through this link: http://bit.ly/2HklnJ8

B. Discussion

Teacher’s Notes
An alternative way of presenting the following discussion is through the video lecture
included in your Quipper Video subscription package. Just log in to your teacher
account at http://link.quipper.com/ and assign your students the corresponding video
lecture which they can watch either at home or in the classroom.

Suggested Instructional Flow

1. Define and Discover

In this lesson, the following key terms and concepts will be discussed:

• Annuity – a sum of money that is paid in regular equal payments

Example:
Installment payments, monthly rentals, and life insurance premiums are
annuities.

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 Unit 13: Simple and General Annuities • Grade 11
• Payment Interval – the period of time between consecutive payments

Example:
Ged buys a new smartphone and agrees to pay it via installment. He will pay
₱1 500 every month for 2 years. In this case, the payment interval of the annuity
is monthly.

• Term – the time from the beginning of the first payment interval to the end of
the last payment interval

Example:
Ged buys a new smartphone and agrees to pay it via installment. He will pay
₱1 500 every month for 2 years. In this case, the term of the annuity is 2 years.

• Types of Annuity Based on Payment Duration

1. Annuity Certain

It is an annuity payable for a definite duration. It means that this annuity

begins and ends on a definite date.

Example:
Arya buys a new laptop and agrees to pay through installment. She will pay
₱2 500 every month for 2 years.

2. Perpetuity

It is an annuity payable over a term that has a definite start date but no
definite end date.

Example:
Payment of housing rent is a perpetuity.

3. Contingent Annuity

It is an annuity payable for an indefinite duration. It means that the

beginning or the termination is dependent on some certain event.

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 Unit 13: Simple and General Annuities • Grade 11
Example:
Insurance and pension payments are contingent annuities.

• Kinds of Annuity Certain

1. Simple Annuity

It is an annuity certain whose compounding period is the same as the

payment interval.

Example:
Leonard buys a brand-new TV with installment payment at the end of each
month with interest compounded monthly.

2. General annuity

It is an annuity certain whose compounding period is not the same as the

payment interval.

Example:
Sheldon buys a brand-new TV with installment payment at the end of each
quarter with interest compounded annually.

• Types of Annuity Based on Time of Periodic Payment

1. Ordinary Annuity

It is an annuity in which the periodic payment is made at the end of each

payment interval.

Example:
Sam buys a washing machine with an installment payment at the end of
every month for one year.

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 Unit 13: Simple and General Annuities • Grade 11
2. Annuity Due

It is an annuity in which the periodic payment is made at the beginning of

each payment interval.

Example:
Gilly buys a washing machine with an installment payment at the beginning
of every month for one year.

• Future Value and Present Value of an Ordinary Annuity

The future value (also called the amount) of an ordinary annuity, denoted by
𝐹𝑉 is the total of the payments and interest earned at the end of the term. We
use the following formula to calculate the future value of an ordinary annuity.

(1 + 𝑖)𝑛 − 1
𝐹𝑉 = 𝑅 [ ]
𝑖

where,

𝑅 = regular or periodic payment,

𝑟
𝑖 = periodic rate, given by 𝑖 = , where 𝑟 is the interest rate and 𝑚 is the number
𝑚
of compounding periods within a year, and
𝑛 = total number of conversion periods for the whole term, given by 𝑛 = 𝑡 ∙ 𝑚,
where 𝑡 is the length of the term in years.

Example:
Ms. Garcia deposits ₱1 500 at the end of every month and earns 3% interest
compounded monthly. After 10 years, her money is ₱209 612.13.

It is an ordinary annuity because Ms. Garcia pays at the end of every month.
The regular payment is ₱1 500.
The interest rate is 𝑟 = 0.03.
The number of compounding periods within a year is 𝑚 = 12.
𝑟 0.03
The periodic rate is 𝑖 = 𝑚 = 12
= 0.0025.
The total number of conversion periods for the whole term is

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 Unit 13: Simple and General Annuities • Grade 11
𝑛 = 𝑡 ∙ 𝑚 = 10 ∙ 12 = 120, where 𝑡 = 10 years.
The future value is ₱209 612.13.

The present value of an ordinary annuity, denoted by 𝑃𝑉, is the principal that
must be invested today to provide the regular payments for the annuity. We use
the following formula to calculate the present value of an ordinary annuity.

1 − (1 + 𝑖)−𝑛
𝑃𝑉 = 𝑅 [ ]
𝑖

where,

𝑅 = regular or periodic payment,

𝑟
𝑖 = periodic rate, given by 𝑖 = 𝑚, where 𝑟 is the interest rate and 𝑚 is the number
of compounding periods within a year, and
𝑛 = total number of conversion periods for the whole term, given by 𝑛 = 𝑡 ∙ 𝑚,
where 𝑡 is the length of the term in years.

Example:
Jessie buys a new phone that costs ₱17 061.76. The mode of payment is
installment for one year. She agrees to pay ₱1 500 at the end of every month,
and she is charged with a 10% interest rate compounded monthly.

It is an ordinary annuity because Jessie pays at the end of every month.

The regular payment is ₱1 500.
The interest rate is 𝑟 = 0.10.
The number of compounding periods within a year is 𝑚 = 12.
𝑟 0.1
The periodic rate is 𝑖 = 𝑚 = 12
≈ 0.0083.
The total number of conversion periods for the whole term is
𝑛 = 𝑡 ∙ 𝑚 = 1 ∙ 12 = 12, where 𝑡 = 1 year.
The present value is ₱17 061.76.

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 Unit 13: Simple and General Annuities • Grade 11
• Future Value and Present Value of an Annuity Due

For the future value of an annuity due, denoted by 𝐹𝑉AD , we use the
following formula.

(1 + 𝑖)𝑛+1 − 1
𝐹𝑉AD = 𝑅 [ − 1]
𝑖

where,

𝑅 = regular or periodic payment,

𝑟
𝑖 = periodic rate, given by 𝑖 = 𝑚, where 𝑟 is the interest rate and 𝑚 is the number
of compounding periods within a year, and
𝑛 = total number of conversion periods for the whole term, given by 𝑛 = 𝑡 ∙ 𝑚,
where 𝑡 is the length of the term in years.

Example:
Ms. Lacerna deposits ₱1 500 at the beginning of every month that earns 3%
interest compounded monthly. After 10 years, her money is ₱210 136.16.

It is an annuity due because Ms. Lacerna pays at the beginning of every month.
The regular payment is ₱1 500.
The interest rate is 𝑟 = 0.03.
The number of compounding periods within a year is 𝑚 = 12.
𝑟 0.03
The periodic rate is 𝑖 = 𝑚 = 12
= 0.0025.
The total number of conversion periods for the whole term is
𝑛 = 𝑡 ∙ 𝑚 = 10 ∙ 12 = 120, where 𝑡 = 10 years.
The future value is ₱210 136.16.

For the present value of an annuity due, denoted by 𝑃𝑉AD , we use the
following formula.

1 − (1 + 𝑖)1−𝑛
𝑃𝑉AD = 𝑅[ + 1]
𝑖

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 Unit 13: Simple and General Annuities • Grade 11
where,

𝑅 = regular or periodic payment,

𝑟
𝑖 = periodic rate, given by 𝑖 = 𝑚, where 𝑟 is the interest rate and 𝑚 is the number
of compounding periods within a year, and
𝑛 = total number of conversion periods for the whole term, given by 𝑛 = 𝑡 ∙ 𝑚,
where 𝑡 is the length of the term in years.

Example:
Janella buys a new phone that costs ₱17 203.94. The mode of payment is
installment for one year. She agrees to pay ₱1 500 every beginning of the month
that charges 10% interest rate compounded monthly.

It is an annuity due because she pays at the beginning of every month.

The regular payment is ₱1 500.
The interest rate is 𝑟 = 0.10.
The number of compounding periods within a year is 𝑚 = 12.
𝑟 0.1
The periodic rate is 𝑖 = 𝑚 = 12
≈ 0.0083.
The total number of conversion periods for the whole term is
𝑛 = 𝑡 ∙ 𝑚 = 1 ∙ 12 = 12, where 𝑡 = 1 year.
The present value is ₱17 203.94

2. Develop and Demonstrate

The following examples may be used in the discussion.

Teacher’s Notes
Use the Try It! slides of the corresponding presentation file to present the worked
examples. You may also refer to the worked examples provided in the study guide
for varieties.

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 Unit 13: Simple and General Annuities • Grade 11

Example 1: Erika deposits ₱1 000 at the end of every 3 months in an

account that pays 3% compounded quarterly. How much
will the amount in the account be after 5 years?

Solution/Explanation: 1. Identify the given information from the problem.

The regular payment is 𝑅 = 1 000.

The interest rate is 3% or 𝑟 = 0.03. The number of

compounding periods within a year is 𝑚 = 4 since
compounding is done quarterly.
𝑟 0.03
Thus, the periodic rate is 𝑖 = = = 0.0075.
𝑚 4

The length of the term is 5 years or 𝑡 = 5.

Thus, the total number of conversion periods for
the whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 4 ⋅ 5 = 20.

2. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the future value of the

annuity since we would like to know the value
after 5 years. Moreover, it is a simple ordinary
annuity since the payment is done at the end of
every three months.

3. Solve for the future value of the ordinary annuity.

(1 + 𝑖)𝑛 − 1
𝐹𝑉 = 𝑅 [ ]
𝑖
(1 + 0.0075)20 − 1
𝐹𝑉 = 1 000 [ ]
0.0075
𝐹𝑉 = 21 491.22

Thus, Erika will have ₱𝟐𝟏 𝟒𝟗𝟏. 𝟐𝟐 in her account after 5

years.

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 Unit 13: Simple and General Annuities • Grade 11

Example 2: Mark purchased a cellphone via installment payment that

charges 6% interest compounded monthly. He agreed to
pay ₱1 500 every beginning of the month for two years.
What is the cash price of the cellphone?

Solution/Explanation: 1. Identify the given information from the problem.

The regular payment is 𝑅 = 1 500.

The interest rate is 6% or 𝑟 = 0.06. The number of

compounding periods within a year is 𝑚 = 12 since
compounding is done monthly.
𝑟 0.06
Thus, the periodic rate is 𝑖 = 𝑚 = 12
= 0.005.

The length of the term is 2 years or 𝑡 = 2.

Thus, the total number of conversion periods for
the whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 12 ⋅ 2 = 24.

2. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the present value of the

annuity since we would like to know the present
cash price of the cellphone. Moreover, it is a
simple annuity due since the payment is done at
the beginning of the month.

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 Unit 13: Simple and General Annuities • Grade 11

3. Solve for the present value of the annuity due.

1 − (1 + 𝑖)1−𝑛
𝑃𝑉AD = 𝑅 [ + 1]
𝑖
1 − (1 + 0.005)1−24
𝑃𝑉AD = 1 500 [ + 1]
0.005
1 − (1.005)−23
𝑃𝑉AD = 1 500 [ + 1]
0.005
𝑃𝑉𝐴𝐷 = 34 013.52

Thus, the cash price of the cellphone is ₱𝟑𝟒 𝟎𝟏𝟑. 𝟓𝟐.

Example 3: Ms. Cruz is planning to invest in a fund. There are two

options. In Option A, she is required to pay ₱1 500 at the
end of every month that earns 3% interest compounded
monthly. Meanwhile, in Option B, she is required to pay
₱4 500 at the end of every three months that earns 2%
compounded quarterly. Which of these options will give a
higher amount after ten years?

Solution/Explanation: 1. Solve for the value of the money under Option A.

First, let us determine the given values under

Option A.

The regular payment is 𝑅 = 1 500.

The interest rate is 3% or 𝑟 = 0.03. The number of

compounding periods within a year is 𝑚 = 12 since
compounding is done monthly.
𝑟 0.03
Thus, the periodic rate is 𝑖 = 𝑚 = 12
= 0.0025.

The length of the term is 10 years or 𝑡 = 10.

Thus, the total number of conversion periods for
the whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 12 ⋅ 10 = 120.

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 Unit 13: Simple and General Annuities • Grade 11

Next, let us determine the kind of annuity under

Option A.

We know that it illustrates the future value of the

annuity since we are looking for the value of the
money ten years from now. Moreover, it is a
simple ordinary annuity since the payment is done
at the end of every month.

Using the formula for the future value of a simple

ordinary annuity, let us determine the amount of
the investment after 10 years.

(1 + 𝑖)𝑛 − 1
𝐹𝑉 = 𝑅 [ ]
𝑖
(1 + 0.0025)120 − 1
𝐹𝑉 = 1 500 [ ]
0.0025
(1.0025)120 − 1
𝐹𝑉 = 1 500 [ ]
0.0025
𝐹𝑉 = 209 612.13

Thus, she will have ₱209 612.13 after ten years.

2. Solve for the value of the money under Option B.

This time, let us determine the given values under

Option B.

The regular payment is 𝑅 = 4 500.

The interest rate is 2% or 𝑟 = 0.02. The number of

compounding periods within a year is 𝑚 = 4 since
compounding is done quarterly.
𝑟 0.02
Thus, the periodic rate is 𝑖 = = = 0.005.
𝑚 4

The length of the term is 10 years, or 𝑡 = 10.

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 Unit 13: Simple and General Annuities • Grade 11

Thus, the total number of conversion periods for

the whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 4 ⋅ 10 = 40.

Next, let us determine the kind of annuity under

Option B.

We know that it illustrates the future value of the

annuity since we are looking for the value of the
money ten years from now. Moreover, it is a
simple ordinary annuity since the payment is done
at the end of every quarter.

Using the formula for the future value of a simple

ordinary annuity, let us determine the amount of
the investment after 10 years.

(1 + 𝑖)𝑛 − 1
𝐹𝑉 = 𝑅 [ ]
𝑖
(1 + 0.005)40 − 1
𝐹𝑉 = 4 500 [ ]
0.005
(1.005)40 − 1
𝐹𝑉 = 4 500 [ ]
0.005
𝐹𝑉 = 198 714.81

Thus, she will have ₱198 714.81 after ten years.

Therefore, she must choose Option A since it gives a

higher value at the end of ten years.

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 Unit 13: Simple and General Annuities • Grade 11
C. Practice and Feedback

Teacher’s Notes
Use the Let’s Practice! slides of the corresponding presentation file to present the
questions for practice. You may also refer to the Try It Yourself! questions provided in
the study guide for varieties.

For individual practice

1. Ask the students to answer the following problem items individually using pen and
paper.
2. Give students enough time to answer the problem items.
3. Call a random student to show his or her work on the board afterward.
4. Let the student share how he or she comes up with his or her solution.
5. Inform the student the accuracy of his answer and solution, and in the case when
there is some sort of misconception, lead the student to the right direction to find
the correct answer.

Problem 1: Determine if the given situation uses simple or general

annuity.
a. Payments are made at the end of every six months for a
loan that charges 2.5% interest compounded quarterly.
b. Deposits of ₱2 500 are made at the end of every three
months to an account that earns 5% interest
compounded quarterly.
c. Mr. Dela Cruz pays at the end of every month for a loan
that charges 4% interest compounded semiannually.

Solution/Explanation: In the first situation, the payment interval is done

semiannually, but the compounding period is done quarterly.
Since the payment interval and the compounding period is
not the same, the situation illustrates a general annuity.

In the second situation, the payment interval is done

quarterly, and the compounding period is also done
quarterly. Since the payment interval and the compounding

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 Unit 13: Simple and General Annuities • Grade 11

period is the same, the situation illustrates a simple annuity.

In the third situation, the payment interval is done monthly,

but the compounding period is done semiannually. Since the
payment interval and the compounding period is not the
same, the situation illustrates a general annuity.

Problem 2: Mrs. Gamboa avails an educational plan payable for 15 years

for her daughter. She agrees to pay ₱2 500 at the end of
every month. The plan earns 3% interest rate compounded
monthly. What amount will she receive after 15 years?

Solution/Explanation: 1. Identify the given information from the problem.

The regular payment is 𝑅 = 2 500.

The interest rate is 3% or 𝑟 = 0.03. The number of

compounding periods within a year is 𝑚 = 12 since
compounding is done monthly.
𝑟 0.03
Thus, the periodic rate is 𝑖 = 𝑚 = 12
= 0.0025.

The length of the term is 15 years, or 𝑡 = 15.

Thus, the total number of conversion periods for the
whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 12 ⋅ 15 = 180.

2. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the future value of the annuity

since we would like to know how much she will
receive after 15 years. Moreover, it is a simple
ordinary annuity since the payment is done at the end
of every month.

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 Unit 13: Simple and General Annuities • Grade 11

3. Solve for the future value of the ordinary annuity.

(1 + 𝑖)𝑛 − 1
𝐹𝑉 = 𝑅 [ ]
𝑖
(1 + 0.0025)180 − 1
𝐹𝑉 = 2 500 [ ]
0.0025
(1.0025)180 − 1
𝐹𝑉 = 2 500 [ ]
0.0025
𝐹𝑉 = 567 431.72

Thus, Mrs. Gamboa will receive ₱𝟓𝟔𝟕 𝟒𝟑𝟏. 𝟕𝟐 after 15 years.

Problem 3: Mr. Montes purchased a car for ₱50 000 down payment and
regular payments of ₱40 000 at the end of every three
months for two years. If the money is compounded by 6%
quarterly, find the cash value of the car.

Solution/Explanation: 1. Identify the given information from the problem.

The regular payment is 𝑅 = 40 000.

The down payment given is ₱50 000.

The interest rate is 6% or 𝑟 = 0.06. The number of

compounding periods within a year is 𝑚 = 4 since
compounding is done quarterly.
𝑟 0.06
Thus, the periodic rate is 𝑖 = 𝑚 = 4
= 0.015.

The length of the term is 2 years or 𝑡 = 2.

Thus, the total number of conversion periods for the
whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 4 ⋅ 2 = 8

2. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the present value of the

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 Unit 13: Simple and General Annuities • Grade 11

annuity since we would like to know the cash value of

the car. Moreover, it is a simple ordinary annuity since
the payment is done at the end of every three
months.

3. Solve for the present value of the ordinary annuity.

1 − (1 + 𝑖)−𝑛
𝑃𝑉 = 𝑅 [ ]
𝑖
1 − (1 + 0.015)−8
𝑃𝑉 = 40 000 [ ]
0.015
𝑃𝑉 = 299 437

4. To compute for the cash value of the car, add the

down payment to the present value of the annuity.

cash value = PV + down payment

cash value = 299 437 + 50 000
cash value = 349 437

Thus, the cash value of the car is ₱𝟑𝟒𝟗 𝟒𝟑𝟕.

For group practice

1. Ask the students to form a minimum of 2 groups to a maximum of 5 groups.
2. Each group will answer problem items 4 and 5. These questions are meant to test
students’ higher-order thinking skills by working collaboratively with their peers.
3. Give students enough time to analyze the problem and work on their solution.
4. Ask each group to assign a representative to show their solution on the board and
discuss as a group how they come up with their solution.
5. Inform the student the accuracy of his answer and solution, and in the case when
there is some sort of misconception, give the student opportunity to work with
his/her peers to re-analyze the problem, and then lead them to the right direction to
find the correct answer.

22
 Unit 13: Simple and General Annuities • Grade 11

Problem 4: Anjo purchased a laptop that is worth ₱50 000. He agreed to

pay it via installment at the beginning of every month for two
years. The payment scheme charges 6% interest
compounded monthly. How much is his monthly payment?

Solution/Explanation: 1. Identify the given information from the problem.

The present value of the laptop is 𝑃𝑉 = 50 000.

The interest rate is 6% or 𝑟 = 0.06. The number of

compounding periods within a year is 𝑚 = 12 since
compounding is done monthly.
𝑟 0.06
Thus, the periodic rate is 𝑖 = 𝑚 = 12
= 0.005.

The length of the term is 2 years or 𝑡 = 2.

Thus, the total number of conversion periods for the
whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 12 ⋅ 2 = 24.

2. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the present value of the

annuity since we are given with the present value of
the laptop, which is ₱50 000. Moreover, it is a simple
annuity due since the payment is done at the
beginning of the month.

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 Unit 13: Simple and General Annuities • Grade 11

3. Solve for the regular payments of the annuity due.

1 − (1 + 𝑖)1−𝑛
𝑃𝑉AD = 𝑅 [ + 1]
𝑖
1 − (1 + 0.005)1−24
50 000 = 𝑅 [ + 1]
0.005
1 − (1.005)−23
50 000 = 𝑅 [ + 1]
0.005
50 000 = 𝑅[22.67568055]
50 000
=𝑅
22.67568055
𝑅 = 2205.01

Hence, Anjo’s monthly payment is ₱𝟐 𝟐𝟎𝟓. 𝟎𝟏.

Problem 5: Mrs. Gutierrez wants to purchase a retirement plan. Two

companies offer different policies. In Company A, she has to
deposit ₱3 000 at the beginning of every month. Her account
will earn a 2.4% interest compounded monthly. In Company
B, she has to deposit ₱9 000 at the end of every three
months. Her account will earn 1.2% interest compounded
quarterly. Both policies are payable for 20 years. Which of
these policies should she choose?

Solution/Explanation: 1. Solve for the value of the money under Company A.

First, let us determine the given values under

Company A.

The regular payment is 𝑅 = 3 000.

The interest rate is 2.4% or 𝑟 = 0.024. The number of

compounding periods within a year is 𝑚 = 12 since
compounding is done monthly.
𝑟 0.024
Thus, the periodic rate is 𝑖 = 𝑚 = 12
= 0.002.

24
 Unit 13: Simple and General Annuities • Grade 11

The length of the term is 20 years, or 𝑡 = 20.

Thus, the total number of conversion periods for the
whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 12 ⋅ 20 = 240.

Next, let us determine the kind of annuity under

Company A.

We know that it illustrates the future value of the

annuity since we are looking for the value of the
money twenty years from now. Moreover, it is a
simple annuity due since the payment is done at the
beginning of every month.

Using the formula for the future value of a simple

ordinary annuity, let us determine the amount of the
investment after 20 years.

(1 + 𝑖)𝑛+1 − 1
𝐹𝑉AD = 𝑅[ − 1]
𝑖
(1 + 0.002)240+1 − 1
𝐹𝑉AD = 3 000 [ − 1]
0.002
𝐹𝑉𝐴𝐷 = 924 795.76

In Company A, her account will accumulate to

₱𝟗𝟐𝟒 𝟕𝟗𝟓. 𝟕𝟔.

2. Solve for the value of the money under Company B.

This time, let us determine the given values under

Company B.

The regular payment is 𝑅 = 9 000.

The interest rate is 1.2% or 𝑟 = 0.012. The number of

compounding periods within a year is 𝑚 = 4 since
compounding is done quarterly.

25
 Unit 13: Simple and General Annuities • Grade 11
𝑟 0.012
Thus, the periodic rate is 𝑖 = = = 0.003.
𝑚 4

The length of the term is 20 years, or 𝑡 = 20.

Thus, the total number of conversion periods for the
whole term is 𝑛 = 𝑚 ⋅ 𝑡 = 4 ⋅ 20 = 80.

Next, let us determine the kind of annuity under

Company B.

We know that it illustrates the future value of the

annuity since we are looking for the value of the
money twenty years from now. Moreover, it is a
simple ordinary annuity since the payment is done at
the end of every three months.

Using the formula for the future value of a simple

ordinary annuity, let us determine the amount of the
investment after 20 years.

(1 + 𝑖)𝑛 − 1
𝐹𝑉 = 𝑅 [ ]
𝑖
(1 + 0.003)80 − 1
𝐹𝑉 = 9 000 [ ]
0.003
(1.003)80 − 1
𝐹𝑉 = 9 000 [ ]
0.003
𝐹𝑉 = 812 377.49

In Company B, her account will accumulate to

₱𝟖𝟏𝟐 𝟑𝟕𝟕. 𝟒𝟗.

Therefore, Mrs. Gutierrez should choose Company A since it

gives a higher value at the end of twenty years.

26
 Unit 13: Simple and General Annuities • Grade 11

Web Box

For more discussion and examples on annuities, you may visit the following web
pages:

• Kagan, Julia. “Future Value of an Annuity.” Investopedia. Retrieved 29 April 2019

from https://bit.ly/2DDLj0f

• Kagan. Julia. “Present Value of an Annuity.” Investopedia. Retrieved 29 April

2019 from https://bit.ly/2VAkJPN

To easily evaluate the future value or present value of simple annuities, you may use
the following online calculators:

• Furey, Edward. “Future Value of Annuity Calculator.” Calculator Soup. Retrieved

15 May 2019 from http://bit.ly/2WLr7B5

• Furey, Edward. “Present Value of Annuity Calculator.” Calculator Soup.

Retrieved 15 May 2019 from http://bit.ly/2WLrb3N

Performance Assessment

This performance assessment serves as formative assessment, divided into three sets
based on student’s level of learning. See next pages for separate printable worksheets.
• Worksheet I (for beginners)
• Worksheet II (for average learners)
• Worksheet III (for advanced learners)

Teacher’s Notes
For a standard performance assessment regardless of the student’s level of learning,
you may give the problem items provided in the Check Your Understanding section of
the study guide.

27
 Unit 13: Simple and General Annuities • Grade 11
Worksheet I

A. Determine if the given situation illustrates a simple or general annuity. (4 points)

1. Payments are made at the end of every three months for a loan that charges 3%
interest compounded quarterly.

2. Deposits of ₱1 000 are made at the end of every three months to an account that
earns 5% interest compounded semiannually.

3. Mr. Padilla pays at the end of every month for a loan that charges 6% interest
compounded monthly.

4. Ms. Sarmiento deposits ₱2 000 at the beginning of every month to her account that
earns 4% interest compounded semiannually.

B. Analyze the given problem and solve for what is asked. Show your complete solution.

1. Find the present value of an ordinary annuity whose semiannual deposit is ₱6 000 at
5% compounded semiannually for 5 years. (3 points)

Solution and answer:

28
 Unit 13: Simple and General Annuities • Grade 11
2. Find the present value of a series of periodic payments of ₱2 000 made at the
beginning of every month for 4 years if the money is worth 6% compounded
monthly. (3 points)

Solution and answer:

3. How much should be invested at the beginning of every three months at 4%

compounded quarterly to accumulate ₱50 000 after 5 years? (3 points)

Solution and answer:

29
 Unit 13: Simple and General Annuities • Grade 11
4. Anna purchased a TV worth ₱60 000. She agreed to pay it via installment at the end
of every month for two years. The payment scheme charges 5% interest
compounded monthly. How much is his monthly payment? (3 points)

Solution and answer:

5. Mr. Mendoza plans to open an investment account. There are two banks he is
considering. In Bank A, he should deposit ₱4 000 at the end of every month, and it
earns 3.7% interest compounded monthly. In Bank B, he should deposit ₱12 000 at
the end of every three months, and it earns 8% interest compounded quarterly.
Which of the two options will accumulate more money after 10 years? (4 points)

Solution and answer:

30
 Unit 13: Simple and General Annuities • Grade 11
Worksheet II

A. Determine if the given situation illustrates a simple or general annuity. (4 points)

1. Payments are made at the end of every month for a loan that charges 3% interest
compounded quarterly.

2. Deposits of ₱1 000 are made at the end of every two months to an account that
earns 5% interest compounded semiannually.

3. Mr. Padilla pays at the end of every six months for a loan that charges 6% interest
semiannually.

4. Ms. Sarmiento deposits ₱2 000 at the beginning of every six months to her account
that earns 4% interest compounded semiannually.

B. Analyze the given problem and solve for what is asked. Show your complete solution.

1. Find the present value of an annuity due whose quarterly deposit is ₱2 500 at 4%
compounded quarterly for 5.5 years. (3 points)

Solution and answer:

31
 Unit 13: Simple and General Annuities • Grade 11
2. Find the accumulated value of a series of periodic payments of ₱2 000 made at the
beginning of every two months for 10 years if the money is worth 6% compounded
bimonthly. (3 points)

Solution and answer:

3. How much should be invested at the end of every six months at 5% compounded
semiannually to accumulate ₱40 000 after 5 years? (3 points)

Solution and answer:

32
 Unit 13: Simple and General Annuities • Grade 11
4. Jimmy buys a car worth ₱900 000. He pays a down payment of ₱80 000 and agrees
that the balance will be paid within 5 years. If the payments are to be made at the
end of each month and the interest is 12% compounded monthly, how much is each
monthly payment? (3 points)

Solution and answer:

5. Mr. Mendoza plans to open an investment account. There are two banks that he is
considering. In Bank A, he should deposit ₱6 000 at the end of every two months,
and it earns 3.5% interest compounded bimonthly. In Bank B, he should deposit
₱3 000 at the end of every month, and it earns 4% interest compounded monthly.
Which of the two options will accumulate more money after 10 years? (4 points)

Solution and answer:

33
 Unit 13: Simple and General Annuities • Grade 11
Worksheet III

A. Determine if the given situation represents a simple or a general annuity. (4 points)

1. Payments are made at the end of every two months for a loan that charges 3%
interest compounded quarterly.

2. Deposits of ₱1 000 are made at the end of every six months to an account that
earns 5% interest compounded semiannually.

3. Mr. Padilla pays at the end of every six months for a loan that charges 6% interest
semiannually.

4. Ms. Sarmiento deposits ₱2 000 at the beginning of every three months to her
account that earns 4% interest compounded semiannually.

B. Analyze the following problem and solve what is asked. Show your complete solution.

1. Find the present value of a series of periodic payments of ₱1 000 made at the
beginning of every three months for 11 years and nine months if the money is
worth 4% compounded quarterly. (3 points)

Solution and answer:

34
 Unit 13: Simple and General Annuities • Grade 11
2. How much should be invested at the end of every six months at 3% compounded
semiannually to accumulate ₱80 000 after 7 years and 6 months? (3 points)

Solution and answer:

3. Mr. Mendoza plans to invest in an educational plan for his son. There are two
options. In Option A, he should deposit ₱5 000 at the end of every two months, and
it earns 4% interest compounded bimonthly. In Option B, he should deposit ₱2 500
at the end of every month, and it earns 4.5% interest compounded monthly. Which
of the two options will accumulate more money after 12 years? (3 points)

Solution and answer:

35
 Unit 13: Simple and General Annuities • Grade 11
4. Mrs. Mondragon bought a house that costs ₱1 200 000 for a 10% down payment.
The remaining balance will be paid via installment every end of the month for 7
years and charges 6% interest compounded monthly. How much is her monthly
payment?
(3 points)

Solution and answer:

5. Mr. Delos Santos deposits ₱1 000 in his investment account every end of the month.
The account earns 4% compounded monthly. How long will it take for his account to
accumulate ₱51 959.60? (4 points)

Solution and answer:

36
 Unit 13: Simple and General Annuities • Grade 11
Answer Key

Worksheet I

A. 1. Simple
2. General
3. Simple
4. General

B. 1. ₱52 512.38
2. ₱85 586.44
3. ₱2 248.28
4. ₱2 632.28
5. Bank A would generate ₱579 776.08 while Bank B would generate ₱724 823.80. Bank
B would accumulate more money.

Worksheet II

A. 1. General
2. General
3. Simple
4. Simple

B. 1. ₱49 642.46
2. ₱164 972.73
3. ₱3 570.35
4. ₱18 240.45
5. Bank A would generate ₱429 557.41 while Bank B would generate ₱441 749.41. Bank
B would accumulate more money.

37
 Unit 13: Simple and General Annuities • Grade 11
Worksheet III

A. 1. General
2. Simple
3. Simple
4. General

B. 1. ₱37 727.24
2. ₱4 795.55
3. Option A would generate ₱460 126.63 while Option B would generate ₱476 183.07.
Option B is a better choice.
4. ₱15 777.24
5. 4 years

38
 Unit 13: Simple and General Annuities • Grade 11

Synthesis

Wrap-up To summarize the lesson, ask students the following

questions:
1. What is an annuity?
2. How do you distinguish a simple annuity from a
general annuity?
3. How do you solve for the future and present values of
a simple annuity?

Application and Values To integrate values and build connection to the real world,
Integration ask students the following questions:
1. What part of the lesson did you find hard to
comprehend?
2. How does knowing the concept of annuity help you in
decision-making regarding finances?

Bridge to the Next Topic To spark interest for the next lesson, ask students the
following questions:
1. Do you think the steps in solving problems involving
general annuities would be similar to the steps in
solving problems involving simple annuities?
2. In what fields can you see the application of general
annuities?

Bibliography
Aduana, Nick L. Mathematics of Investment: Procedural Approach. Quezon City: C & E
Publishing, Inc., 2012.

Kagan, Julia. “Future Value of an Annuity.” Investopedia. Retrieved 29 April 2019 from
https://bit.ly/2DDLj0f

Kagan. Julia. “Present Value of an Annuity.” Investopedia. Retrieved 29 April 2019 from
https://bit.ly/2VAkJPN

39