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    Activity Sheet 3 Ordinary Annuity

    Uploaded by

    Faith Calingo
    1. The document provides examples of calculating terms and payments for ordinary annuities. It finds the number of payments, interest rates, present and future values, and irregular final payments. 2. Formulas used include finding the term (n) as the log of a fraction, and the final payment (x) as the future value minus the regular payment times an interest factor. 3. Examples include amortizing a debt, paying off a loan, and determining deposits needed to reach a savings goal. Final payments are calculated for 3-month periods after the last regular payment and on the same date as the last payment.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Activity Sheet 3 Ordinary Annuity

    Uploaded by

    Faith Calingo
    118 views4 pages
    1. The document provides examples of calculating terms and payments for ordinary annuities. It finds the number of payments, interest rates, present and future values, and irregular final payments. 2. Formulas used include finding the term (n) as the log of a fraction, and the final payment (x) as the future value minus the regular payment times an interest factor. 3. Examples include amortizing a debt, paying off a loan, and determining deposits needed to reach a savings goal. Final payments are calculated for 3-month periods after the last regular payment and on the same date as the last payment.

    Original Title

    ACTIVITY-SHEET-3-ORDINARY-ANNUITY (2) (1)

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    1. The document provides examples of calculating terms and payments for ordinary annuities. It finds the number of payments, interest rates, present and future values, and irregular final payments. 2. Formulas used include finding the term (n) as the log of a fraction, and the final payment (x) as the future value minus the regular payment times an interest factor. 3. Examples include amortizing a debt, paying off a loan, and determining deposits needed to reach a savings goal. Final payments are calculated for 3-month periods after the last regular payment and on the same date as the last payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    118 views4 pages

    Activity Sheet 3 Ordinary Annuity

    Uploaded by

    Faith Calingo
    1. The document provides examples of calculating terms and payments for ordinary annuities. It finds the number of payments, interest rates, present and future values, and irregular final payments. 2. Formulas used include finding the term (n) as the log of a fraction, and the final payment (x) as the future value minus the regular payment times an interest factor. 3. Examples include amortizing a debt, paying off a loan, and determining deposits needed to reach a savings goal. Final payments are calculated for 3-month periods after the last regular payment and on the same date as the last payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    DE LA SALLE-COLLEGE OF SAINT BENILDE

    SCHOOL OF MULTIDISCIPLINARY STUDIES

    ACT. 3 – __________, 2020


    ANNUITY (FINDING A, S , n AND x)
    OLGE01
    NAME: Faith Nicolette M. Calingo SCORE

    Ordinary Annuity (Finding A and S)

    Formula:
    1. To have his own pad, James decided to deposit Php20,000 at the end of each month in a bank paying 7%
    compounded monthly. How much would he expect to have in three years?

    Given: R = Php 20 000 m = 12 i = 0.07/12 = 0.0058333333333 t = 3 n = 36

    Formula : S = R [ (1 + i)n - 1 / i ]

    Solution:

    S = 20 000 [ (1 + 0.0058333333333)³⁶ - 1 / 0.0058333333333 ]

    S = 20 000 [ (1.0058333333333)³⁶ - 1 / 0.0058333333333 ]

    S = 20 000 [ 1.23292558747546 - 1 / 0.0058333333333 ]

    S = 20 000 ( 0.23292558747546 / 0.0058333333333 )

    S = 20 000 ( 39.930100710307 )

    S = Php 798 602.01

    2. A brand new pick-up truck was bought for Php420,000 downpayment and monthly installments of Php15,000 at
    the end of each month for 4 ½ years. What is the cash price of the truck if money is worth 18% compounded
    monthly?

    Given: DP = Php 420 000 R = Php 15 000 t = 4½ or 4.5 years i = 0.18/12 = 0.015 m = 12 n = 54

    Formula: CP = DP + R [ 1 - (1+i)-n / i ]

    Solution:

    CP = 420 000 + 15 000 [ 1 - (1+0.015)-⁵⁴ / 0.015 ]

    CP = 420 000 + 15 000 [ 1 - (1.015)-⁵⁴ / 0.015 ]

    CP = 420 000 + 15 000 ( 1 - 0.44754191776872 / 0.015 )

    CP = 420 000 + 15 000 ( 0.55245808223128 / 0.015 )

    CP = 420 000 + 15 000 (36.8305388154187)

    CP = 420 000 + 552 458.08

    CP = Php 972 458.08

    3. Find the PRESENT VALUE and the AMOUNT of a Php7,500 ordinary annuity payable quarterly for 12 years if
    money is worth 12.5% compounded quarterly.

    Given: R = Php 7 500 m = 4 t = 12 years n = 48 i = 0.125/4 = 0.03125

    Formula : S = R [ (1 + i)n - 1 / i ] and A = R [ 1 - (1+i)-n / i ]

    Solution:

    S = 7 500 [ (1 + 0.03125)⁴⁸ - 1 / 0.03125 ]

    S = 7 500 [ (1.03125)⁴⁸ - 1 / 0.03125 ]


    S = 7 500 [ 4.37996010545899 - 1 / 0.03125 ]
    S = 7 500 ( 3.37996010545899 / 0.03125 )

    S = 7 500 ( 108.158723374688 )

    S = Php 811 190.43

    A = R [ 1 - (1+i)-n / i ]

    A = 7 500 [ 1 - (1+0.03125)-⁴⁸ / 0.03125 ]

    A = 7 500 [ 1 - (1.03125)-⁴⁸ / 0.03125 ]

    A = Php 185 204.98

    Ordinary Annuity (Finding R) Formula:


    1. Edison wants to have Php900,000 in 4 years. He makes semi-annual deposits in a savings account paying interest
    at 8% compounded semi-annually. Find the semi-annual deposit.

    Given: S = Php 900 000 t = 4 years m = 2 n = 8 i = 0.08/2 = 0.04

    Formula: R = i S / ( 1+i )n - 1

    Solution:

    R = (0.04)(900 000) / ( 1+0.04 )⁸ - 1

    R = 36 000 / (1.04)⁸ - 1

    R = 36 000 / 1.2166529024 - 1

    R = 36 000 / 0.2166529024

    R = Php 137 580.34

    2. A mother wishes to have Php800,000 eight years from today for her son’s graduation. How much should she
    deposit monthly in a bank if it pays interest at 14%, m = 12?

    Given: A = Php 800 000 t = 8 years m = 12 n = 96 i = 0.14/12 = 0.0116666666666

    Formula: R = i A / 1 - ( 1+i )-n

    Solution:

    R = (0.04)(900 000) / 1 - ( 1+0.0116666666666 )-96

    R = 9 333.33 / 1 - (1.0116666666666)-96

    R = 9 333.33 / 1 - 0.3284019245769

    R = 9 333.33 / 0.6715980754231

    R = Php 13 897.20

    3. A newly married couple bought a house and lot worth Php2.8M. They paid a downpayment of Php300,000 with
    an agreement to pay the balance in 18 years at 18% compounded quarterly. How much is the quarterly
    payment?

    Given: A = Php 2 800 000 - Php 300 000 = Php 2 500 000 t = 18 years m = 4 n = 72 i = 0.18/4 = 0.045

    Formula: R = i A / 1 - ( 1+i )-n

    Solution:

    R = (0.045)(2 500 000) / 1 - ( 1+0.045 )-72

    R = 112 500 / 1 - (1.045)-72

    R = 112 500 / 1 - 0.04203655214527

    R = 112 590 / 0.95796344785473

    R = Php 117 436.63


    ANNUITY (FINDING THE TERM OF OA) – ODFM1/ODFM8

    1. A P28,000 debt at 15% interest compounded semi-annually is to be amortized at P2,250 every 6 months. A final smaller
    payment is to be made after the last regular payment.
    a. How many regular payments are needed?

    A = Php 28 000 R = Php 2 250 m = 2 j = 0.15 i = 0.15/2 = 0.075

    Formula: n = log [ 1 - (i A / R) / -log (1 + i)

    Solution:

    n = log [ 1 - ((0.075)(28 000) / 2 250) / -log (1 + 0.075)

    n = log [ 1 - (2 100/2 250) / -log (1.075)

    n = 37.4450418725858

    n = 37

    b. When will the final smaller payment be due?

    On the 38th semi-annual payment.

    c. How much is the final payment

    n(r) = 37 n(l) = 38

    Formula: x = A(1+i)n(r) - R [ (1 + i)n(l) - 1 / i ] ( 1 + i )

    Solution:

    x = 28 000 (1+0.075)³⁷ - 2 250 [ (1 + 0.075)³⁸ - 1 / 0.075 ] ( 1 + 0.075 )

    x = 28 000 (1.075)³⁷ - 2 250 [ (1.075)³⁸ - 1 / 0.075 ] ( 1.075 )

    x = Php 1 021.46

    2. A company borrowed P45,200 from a savings and loan association that charges 14% converted quarterly. To pay off the loan,
    the company promised to pay P2,000 every 3 months.
    a. When will the company make the last P2,000 payment

    After 3 months.

    b. Find the final irregular payment if it is made 3 months after the last regular payment date.

    Given: A = Php 45 200 R = Php 2 000 m = 4 i = 0.14/4 = 0.035

    Formula: x = A(1+i)n(r) - R [ (1 + i)n(l) - 1 / i ] ( 1 + i )

    n = log ( 1 - i A / R ) / -log ( 1 + i )

    Solution:

    n = log ( 1 - (0.035) (45 200) / 2 000 ) / -log ( 1 + 0.035 )

    n = 45.504 = 45

    n (r) = 45 n (l) = 46

    x = 45 200 (1+0.035)⁴⁶ - 2 000 [ (1 + 0.036)⁴⁵ - 1 / 0.035 ] ( 1 + 0.035)

    x = 45 200 (1.035)⁴⁶ - 2 000 [ (1.035)⁴⁵ - 1 / 0.035 ] ( 1.035 )


    x = Php 1 017.67

    c. Find the final irregular payment if it is made on the day of the last regular payment.

    Formula: x = A(1+i)n(r) - R [ (1 + i)n(r) - 1 / i ] ( 1 + i )

    Solution:

    x = 45 200 (1+0.035)⁴⁵ - 2 000 [ (1 + 0.036)⁴⁵ - 1 / 0.035 ] ( 1 + 0.035)

    x = 45 200 (1.035)⁴⁵ - 2 000 [ (1.035)⁴⁵ - 1 / 0.035 ] ( 1.035 )

    x = Php 6, 421.45

    3. A mother deposits P15,500 each quarter in a savings bank paying 12.5% compounded quarterly. If she desires to accumulate
    P175,000,
    a). how many full deposits must she make?

    D = P15 500 S = P175 000 m = 4 i = 0.125/4 = 0.03125

    Formula: n = log [(i A / R) + 1 / log (1 + i)

    Solution:

    n = log [(0.03125)(175 000) / 15 500) + 1 / log (1 + 0.03125)

    n = log [ 5468.75/15 500 + 1 / log (1.03125)

    n = 9.82 = 9

    b). How much will the final deposit be (if any) if it is made 3 months after the last full deposit of P15,500?

    Formula: x = S - D [ (1+i)n(r) - 1 / i ]

    Solution:

    x = 175 000 - 15 500 [ (1+0.03125)⁹ - 1 / 0.03125 ]

    x = 175 000 - 15 500 [ (1.03125)⁹ - 1 / 0.03125 ]

    x = Php 16 729.51

    c). How much will the final deposit be if it is made on the last deposit date?

    Formula: x = S - D [ (1+i)n(r) - 1 / i ] ( 1 + 0.03125 )

    Solution:

    x = 175 000 - 15 500 [ (1+0.03125)⁹ - 1 / 0.03125 ] (1.03125)

    x = 175 000 - 15 500 [ (1.03125)⁹ - 1 / 0.03125 ] (1.03125)

    x = Php 11 783.56

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