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Illustrate simple and general
annuities
Distinguish between simple and
general annuities
Find the future value and
present value of simple
ANNUITY
ANNUITY
ANNUITY
A sequence of payments
made at equal (fixed)
intervals or periods of
time.
According to Payment Interval
and Interest Period
Simple Annuity General Annuity
 An annuity where  An annuity where
the payment the payment
interval is the interval is NOT
same as the the same as the
interest period. interest period.
Ordinary Annuity Annuity Due
(Annuity
Immediate)
 A type of annuity  A type of annuity
in which the in which the
payments are payments are
made at the end made at the
of each payment beginning of each
interval. payment interval.
According to Time of Payment

According to Duration
Annuity Certain Contingent Annuity

 An annuity in  An annuity in
which payments which the
begin and end at payments extend
definite times. over an indefinite
(indeterminate)
length of time.
Ms. Gemparo would like

to save ₱3,000 every
month in a fund that
gives 9% compounded
Ms. Gemparo would
like to save ₱3,000
every month in a
fund that gives 9%
compounded
monthly.
A life insurance
contribution paid monthly
while the interest is
compounded quarterly.
A life insurance
contribution paid
monthly while the
interest is
compounded
quarterly.
Nicaellah’s eldest brother

applied for a term life
insurance. His contribution
per year is ₱40,000 that earns
12% compounded monthly for
Nicaellah’s eldest
brother applied for a
term life insurance.
His contribution per
year is ₱40,000 that
earns 12%
compounded
monthly for 20
Daniella decided to join their

office cooperative and
agreed to contribute ₱1,000
per month beginning in
January 2020 which will earn
3% compounded monthly.
Daniella decided to
join their office
cooperative and
agreed to contribute
₱1,000 per month
beginning in January
2020 which will earn
3% compounded
monthly.
A college educational plan

earns 4% compounded
quarterly and payments are
made quarterly.
A college
educational plan
earns 4%
compounded
quarterly and
payments are made
quarterly.
Luisa saves
₱5,000 every 6 months
in a bank that pays
0.25% compounded
Luisa saves
₱5,000 every 6
months in a bank
that pays 0.25%
compounded
monthly.
To pay her debt at 12%

compounded semi-
annually, Nadine
committed for 8 quarterly
payments of ₱24,500.
To pay her debt at
12% compounded
semi-annually,
Nadine committed
for 8 quarterly
payments of
₱24,500.
In order to save money for her

high school graduation, Jaeda
decided to save ₱200 at the
end of each month in a bank
that pays 0.250%
compounded monthly.
In order to save
money for her high
school graduation,
Jaeda decided to
save ₱200 at the
end of each month
in a bank that pays
0.250% compounded
monthly.
Ms. Ledres would like to buy a TV

set payable monthly for 6 months
and interest is 9% compounded
semi-annually.
Ms. Ledres would
like to buy a TV set
payable monthly for
6 months and
interest is 9%
compounded semi-
annually.
Shaira deposits ₱10,000 on January

20, 2020 and had deposited the same
amount on the same date every
month. The China Bank credits 2.4%
interest compounded annually to
Shaira’s ccount.
Shaira deposits
₱10,000 on January
20, 2020 and had
deposited the same
amount on the same
date every month.
The China Bank
credits 2.4% interest
compounded annually
IMPORTANT
TERMINOLOGIES
TERMINOLOGIES
Term of an Annuity (t)

The time between the first payment
interval and last payment interval.
Regular or Periodic Payment (R)

The amount of each payment.
TERMINOLOGIES
Amount (Future Value) of an Annuity
(F)
The sum of future values of all
payments to be made during the
entire term of the annuity
Present Value of an Annuity (R)
The sum of present values of all
payments to be made during the
entire annuity.
To solve for Amount (Future
Value) of an Ordinary Annuity:
[ ]
𝒏
( 𝟏+ 𝒋 ) − 𝟏
𝑭 =𝑹
𝒋
[ ]
𝒏
( 𝟏+ 𝒋 ) − 𝟏
𝑭 =𝑹
𝒋
Number of
Payments
Interest Rate 𝒏=𝒎𝒕
Regular per Period
(𝒎 )
Payment 𝒊
𝒋=
Future Value 𝒎
1. Suppose Mrs. Mirandilla
would like to save ₱3,000
every month in a fund that
gives 9% compounded
monthly. How much is the
amount or future value of her
savings after 6 months?
¿ ₱ 18,340.89
2. In order to save money for
her high school graduation,
Ms. Norbe decided to save
₱200 at the end of each
month. If the bank pays
0.250% compounded
monthly, how much will her
money be at the end of 6
years? ¿ ₱ 1,450.70
3. Alling Alliya started to
deposit ₱2,000 quarterly in a
fund that pays 5.5%
compounded quarterly. How
much will be in the fund after
6 years and 9 months?
¿ ₱ 64,855. 8 4
To solve for Present Value of
an Ordinary Annuity:
[ ]
−𝒏
𝟏 − (𝟏 + 𝒋 )
𝑷 =𝑹
𝒋
[ ]
−𝒏
𝟏 − (𝟏 + 𝒋 )
𝑷 =𝑹
𝒋
Number of
Payments
Interest 𝒏=𝒎𝒕
Rate per
Regular
Period (𝒎 )
Payment 𝒊
𝒋=
Present 𝒎
4. Ms. Parreño works very hard
because she wants to have enough
money in her retirement account
when she reaches the age of 60. She
wants to withdraw ₱36,000 every
after 3 months for 20 years starting
3 months after she retires. How
much must she deposit at retirement
at 12% per year compounded
quarterly for the annuity?
¿ ₱ 1,087,227.48
5. Mrs. Rapsing paid ₱200,000 as
a downpayment for a car. The
remaining amount is to be settled
by paying ₱16,200 at the end of
each month for 5 years. If the
interest is 10.5% compounded
monthly, what is the cash price of
his car?
¿ ₱ 753,702.20
5. Mrs. Rapsing paid ₱200,000 as
a downpayment for a car. The
remaining amount is to be settled
by paying ₱16,200 at the end of
each month for 5 years. If the
interest is 10.5% compounded
monthly, what is the cash price of
his car?
Cash Price DP Present Value
Cash Price
6. Meiji has a buyer of a house
and lot. The buyer pays ₱250,000
cash and ₱10,000 every month
for 20 years. If the money is 9%
compounded monthly, how much
is the cash value of the lot?
¿ ₱ 1,111 , 449 .5 4
6. Meiji has a buyer of a house
and lot. The buyer pays ₱250,000
cash and ₱10,000 every month
for 20 years. If the money is 9%
compounded monthly, how much
is the cash value of the lot?
Cash Price DP Present Value

Cash Price
To solve for Regular or Periodic
Payment of an Annuity:
If F is given: If P is given:
𝑭 𝑷
𝑹= 𝑹= −𝒏
𝒏
( 𝟏+ 𝒋 ) − 𝟏 𝟏 − (𝟏 + 𝒋 )
𝒋 𝒋
7. Kim borrowed ₱100,000. She
agrees to pay the principal plus
interest by paying an equal
amount of money each year for 3
years. What should be her annual
payment if interest is 8%
compounded annually?
𝑷
𝑹= −𝒏¿ ₱ 38,803.35
𝟏 − (𝟏 + 𝒋 )
𝒋
8. Ms. Santos would like to save
₱500,000 for her son’s college
education. How much should she
deposit in a savings account
every 6 months for 12 years if the
interest is 1% compounded semi-
annually?
𝑭
𝑹= 𝒏 ¿ ₱ 19,660.31
( 𝟏+ 𝒋 ) − 𝟏
𝒋
9. Ms. Severo borrowed ₱150,000
payable in 2 years. To repay the
loan, she must pay an amount
every month with an interest of
6% compounded monthly. How
much should she pay every
month?
𝑷
𝑹= −𝒏¿ ₱ 6,648.09
𝟏 − (𝟏 + 𝒋 )
𝒋
1. Find the present value: Quarterly payment
of ₱15,000 for 10 years with interest rate of
8% compounded quarterly.
2. Find the future value: Annual payment of

₱105,000 with interest rate of 12%
compounded annually for 5 years.
3. Find the periodic payment: Quarterly

payment of the loan ₱80,000 for 5 years
with an of 8% compounded quarterly.

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Illustrate simple and general

According to Time of Payment

Annuity Certain Contingent Annuity

Ms. Gemparo would like

Nicaellah’s eldest brother

Daniella decided to join their

A college educational plan

To pay her debt at 12%

In order to save money for her

Ms. Ledres would like to buy a TV

Shaira deposits ₱10,000 on January

Term of an Annuity (t)

Regular or Periodic Payment (R)

Cash Price DP Present Value

2. Find the future value: Annual payment of

3. Find the periodic payment: Quarterly

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