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Deferred Annuity PDF

The document discusses deferred annuities, which are annuities that begin payments after a specified deferral period. It provides examples of calculating present value for different payment structures and scenarios involving future withdrawals. Additionally, it includes formulas for determining the present value based on payment frequency and interest rates.

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3 views12 pages

Deferred Annuity PDF

The document discusses deferred annuities, which are annuities that begin payments after a specified deferral period. It provides examples of calculating present value for different payment structures and scenarios involving future withdrawals. Additionally, it includes formulas for determining the present value based on payment frequency and interest rates.

Uploaded by

hv2s4f42pm
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
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DEFERRED ANNUITY

By: Jahren Pogi


DEFERRED ANNUITY
-An annuity that does not begin until a
given time interval has passed.
PERIOD OF DEFERRAL
PRESENT VALUE
PERIOD OF DEFERRAL
time between the purchase of annuity
and the start of the payments for the
deffered annuity
ANNUALLY = 1
SEMI ANNUALLY= 2
QUARTERLY= 4
MONTHLY= 12
EXAMPLE 1

An annual payments of P2,500 for 24


years that will start 12 years from now.
EXAMPLE 2

Payments of P3,00 every 2 years for 10


years starting at the end of 6 years
PRESENT VALUE
n = mt
i = r/m
R = regular payment
i = interest rate period
n = number of payments
k = number of conversion
periods in the deferral
EXAMPLE 1

On his 40th birthday, Mr. Ramos decided to buy a pension plan for himself.
This plan will allow him to claim P10, 000 quarterly for 5 years starting 3
months after his 60th birthday. What one - time payment should he make on
his 40th birthday to pay off this pension plan, if the interest rate is 8%
compounded quarterly.
EXAMPLE 2

Mr. Quijano decided to sell their farm and to deposit the


fund in a bank. After computing the interest, they learned
that they may be withdraw P480, 000 yearly for 8 years
starting at the end of 6 years when it is time for him to
retire.How much is the fund deposited if the interest rate
is 5% converted annually?
THANK YOU
HAHAHAHA

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