Scribd
Upload
10 views10 pages

Annuity

The document explains the concept of annuities, which are equal payments made at regular intervals, and classifies them based on interest periods and payment schedules. It distinguishes between simple and general annuities, as well as ordinary, due, and deferred annuities. Additionally, it provides examples for calculating the future and present values of different types of annuities.

Uploaded by

Sinamar Laroya-Refuerzo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
10 views10 pages

Annuity

The document explains the concept of annuities, which are equal payments made at regular intervals, and classifies them based on interest periods and payment schedules. It distinguishes between simple and general annuities, as well as ordinary, due, and deferred annuities. Additionally, it provides examples for calculating the future and present values of different types of annuities.

Uploaded by

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

ANNUI

TY
ANNUITY
 a series of equal payments at regular

intervals
 payment made annually

 payment made at different segmental

payment period
CLASSIFICATION OF ANNUITY BASED ON THE
INTEREST PERIOD AND PAYMENT INTERVAL
SIMPLE GENERAL
ANNUITY ANNUITY
the payment interval the payment interval does
coincides with the interest not coincides with the
conversion period interest conversion period
Example: Example:
₱10,000 invested at the end of every Every 3 months, a father deposited
six months for 2 years and that 15% ₱15,000 in a trust fund for the son’s
interest is paid compounded education for 8 years. The money
semiannually. earns 12% compounded monthly.
CLASSIFICATION OF ANNUITY BASED ON
PAYMENT SCHEDULE
an annuity that is paid or
ANNUITY DUE received at the beginning of
the time period
an annuity that is paid or
ORDINARY
received at the end of a time
ANNUITY period
the periodic payment is not
DEFERRED made at the beginning nor at the
ANNUITY end of each payment interval,
but at some later date
Example 1: Future Value of Simple Ordinary Annuity

Solve for the future value for ₱75,000 at 2.7% for 3


years compounded monthly.
Example 2: Present Value of General Annuity Due

Find the present value of an annuity due of ₱10,000 payable


quarterly for 10 years if the money is worth 6% compounded
semi-annually?
Example 3: Future Value of General Annuity Due

Rocky wants to save up to ₱100,000 for his college. He deposits ₱3,500 at


the beginning of each month in an account that earns 4% per year
compounded semi-annually. Will Rocky have enough money saved at the
end of 2 years?
An annuity ₱10,000 payable
at the end of each quarter
for 5 years if the rate of
interest is 10%
compounded monthly. Find
(a) present value and (b)

You might also like