At the end of the lesson, we can…

1. illustrate simple and general annuities.

2. distinguish between simple and general annuities.

3. find the future value and present value of both

simple annuities and general annuities.
Mr. and Mrs. Mariano are planning to have their own
home but have limited budget. They went to a bank
for some advice as to how they can produce enough
amount for the down payment on a house and lot
they have chosen. This is the advice of the bank:
“If you will invest ₱20, 000.00 at the end of each year
for 5 years in an account that pays interest at 10%
compounded annually, you will have the amount for
the down payment of the house and lot at the end of 5
years.”
A fixed sum of money paid to someone
at regular intervals, subject to a fixed
compound interest rate.
ANNUITY CERTAIN – Payable for a definite
duration; begins and ends on a definite or fixed date
ANNUITY UNCERTAIN – Annuity payable for an
indefinite duration; dependent on some certain
events
ANNUITY DUE – An annuity in which the periodic
payment is made at the beginning of each payment
interval
ORDINARY ANNUITY – Annuity un which the
periodic payment is made at the end of each
payment interval
SIMPLE ANNUITY – Interest conversion
or compounding period is equal or the
same as the payment interval
GENERAL ANNUITY – Interest
conversion or compounding period is
unequal or not the same as the payment
interval
PERPETUITIES – A series of periodic
payments which is to run indefinitely
forever.
1. Payments are made at the end of
each month for a loan that charges
1.05% interest compounded
quarterly.
2. A deposit of ₱5,500.00 was made at
the end of every three months to an
account that earns 5.6% interest
compounded quarterly.
1. There are monthly payments of
₱2,000.00 but the interest is 5% per
annum, compounded semiannually.
2. Payments of ₱7,000.00 are made
monthly and interest rates are
compounded monthly.
 !
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1. If you pay ₱50.00 at the end of
each month for 40 years on
account that pays interest at
10% compounded monthly,
how much money do you
have after 40 years?
2. Anthony pays ₱100.00 at the
end of each month for 20
years on account that pays
interest at 8% compounded
monthly. How much money
does Anthony have after 20
years?
3. Alex and Tony are twins. After graduation
and being finally able to get a good job, they
plan for retirement as follows:

§ Starting at age 24, Alex deposits ₱10 000.00 at

the end of each year for 36 years.
§ Starting at age 42, Tony deposits ₱20 000.00 at
the end of each year for 18 years.
Who will have the greater amount at retirement if
both annuities earn 12% per year compounded
annually?
Luis borrows money to buy a new cell
phone. He will repay the loan by making
quarterly payments of ₱5, 000.00 per
quarter for the next 24 months at an
interest rate of 8% per year
compounded quarterly. How much did
Luis borrow? How much interest does
Luis pay?
 "!
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1. Rose works very hard because she wants
to have enough money in her retirement
account when she reaches the age 60. She
wants to withdraw ₱36,000.00 every 3
months for 20 years starting 3 months
after she retires. How much must Rose
deposit at retirement at 12% per year
compounded quarterly for the annuity?
2. Liza’s goal is to have enough money in her
retirement account when she reaches the
age of 60. She wants to withdraw ₱72,
000.00 every 6 months for 15 years
starting 6 months after she retires. How
much must Liza deposit at retirement at
12% per year compounded semiannually
for the annuity?
3. Fernan borrows money to buy a
motorcycle. He will repay the loan by
making monthly payments of ₱1, 500.00
per month for the next 24 months at an
interest rate of 9% per year compounded
monthly. How much did Fernan borrow?
How much interest does Fernan pay?
Suppose Mr. and Mrs. Mariano
deposited ₱20, 000.00 at the
beginning of each year for 5
years in an investment that earns
10% per year compounded
annually, what is the amount or
future value of the annuity?
 !
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1. Angel deposited ₱50, 000.00 at
the beginning of each year for
10 years in an investment that
earns 12% per year
compounded annually. What is
the amount of the annuity?
2. Romano’s parents saved for his
college education by investing ₱12,
000.00 at the beginning of each year
in an education plan that earns 6%
per year compounded annually. What
is the total amount of investment at the
end of 16 years?
3. Mrs. Catalig saved for her daughter’s
college education by investing ₱50,
000.00 at the beginning of each 6
months in plan that earns 12% per
year compounded semiannually. What
is the total amount of investment at the
end of 12 years?
Hope borrows money for the
renovation of her house and repays
by making yearly payments of ₱50,
000.00 at the beginning of each year
for a period of 10 years at an interest
rate 8% compounded annually. How
much did hope borrow?
 "!
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1. Grace borrows and repays by
making yearly payments of
₱100, 000.00 at the beginning of
each year for period of 8 years
at an interest of 10%
compounded annually. How
much did Grace borrow?
2. To accumulate a fund of ₱8, 000.00 at
the end of 10 years, a man will make
equal deposits in fund at the
beginning of each year. How much
should he deposit annually if the fund
is invested at 5% compounded
annually?
3. Karen is promised a pension of ₱2, 500
at the beginning of each month for 15
years. If money is worth 5%
compounded monthly, find the
present value of this pension,
assuming that she will live to receive
all payments.
 A B
₱5, 000.00 deposited every ₱5, 000.00 deposited every
month for 5 years at 8% per year month for 5 years at 8% per year
compounded monthly compounded semiannually
₱1, 500.00 deposited every six ₱1, 500.00 deposited every 5
months for 10 years at 6% per months for 10 years at 6% per
year compounded semiannually year compounded monthly
₱2, 500.00 deposited every year ₱2, 500.00 deposited every year
for 15 years at 10% per year for 30 years at 10% per year
compounded annually compounded semiannually
 !
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1. ₱25, 000.00 will be invested in
an account at the end of each
year at 4% compounded
semiannually. Find the size pf
the fund at the beginning of the
16 year.
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2. Fifty thousand pesos will be
invested in an account at the
end of each year at 8%
compounded quarterly. Find
the size of the fund at the
beginning of 11 year.
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3. Efren will deposit ₱2, 000.00 at the
end of each quarter in a bank
which credits interest
semiannually at the rate of 4%.
Find the sum to Efren’s credit at
the end of the 6th year.
 "!
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1. Find the present value of an
ordinary annuity of ₱2, 000.00
payable annually for 9 years
if the money is worth 5%
compounded quarterly.
2. The latest cell phone sells for ₱5,
000.00 downpayment and ₱900.00
every end of each quarter for 3 years
at the rate of 8% compounded
semiannually. Find the cash
equivalent of the cell phone.
3. A television set was purchased at
₱5, 000.00 down payment and ₱1,
000.00 at the end of each month
for 36 months. If money is worth
10% compounded quarterly, find
the cash value of the set.
 "!
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1. Find the present value of an
annuity due of ₱10, 000.00
payable quarterly for 10
years if money is worth 6%
compounded semiannually.
2. Find the present value of an
annuity due of ₱20, 000.00
payable semiannually for 5
years if money is worth 6%
compounded quarterly.
3. Mr. Samson bought a brand new car
for ₱500, 000.00 down payment and
₱20, 000.00 every first day of each
month for 3 years. If payments are
based on 8% compounded
semiannually, what is the total cash
price of the car?
 !
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1. Emy wants to save ₱100, 000.00 for
her first year of college. She
deposits ₱3, 500.00 at the beginning
of each month in an account that
earns 4% per year compounded
semiannually. Will Emy have enough
money saved at the end of 2 years?
2. Susan wants to save ₱150, 000.00 for
her first year of college, She deposits
₱5, 000.00 at the beginning of each
month in an account that earns 6%
per year compounded quarterly. Will
Susan have enough savings at the
end of 2 years?
3. Find the amount of the general
annuity due of ₱50, 000.00
payable semiannually for 5
years if money is worth 6%
compounded quarterly.