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    Lesson 28 - Simple Annuities (Periodic Payment)

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    April Joy Lascuña
    1. The document defines periodic payments for ordinary annuities and provides the formulas to calculate periodic payments. 2. It gives an example of calculating the periodic payment, present value, and cash value for an annuity with a ₱200,000 down payment and 6 years of ₱12,500 semi-annual payments at an interest rate of 10.5% compounded semi-annually. 3. Additional examples are provided to illustrate calculating annual and semi-annual periodic payments for loans and savings plans using the periodic payment formula.

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    Lesson 28 - Simple Annuities (Periodic Payment)

    Uploaded by

    April Joy Lascuña
    160 views9 pages
    1. The document defines periodic payments for ordinary annuities and provides the formulas to calculate periodic payments. 2. It gives an example of calculating the periodic payment, present value, and cash value for an annuity with a ₱200,000 down payment and 6 years of ₱12,500 semi-annual payments at an interest rate of 10.5% compounded semi-annually. 3. Additional examples are provided to illustrate calculating annual and semi-annual periodic payments for loans and savings plans using the periodic payment formula.

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    1. The document defines periodic payments for ordinary annuities and provides the formulas to calculate periodic payments. 2. It gives an example of calculating the periodic payment, present value, and cash value for an annuity with a ₱200,000 down payment and 6 years of ₱12,500 semi-annual payments at an interest rate of 10.5% compounded semi-annually. 3. Additional examples are provided to illustrate calculating annual and semi-annual periodic payments for loans and savings plans using the periodic payment formula.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    160 views9 pages

    Lesson 28 - Simple Annuities (Periodic Payment)

    Uploaded by

    April Joy Lascuña
    1. The document defines periodic payments for ordinary annuities and provides the formulas to calculate periodic payments. 2. It gives an example of calculating the periodic payment, present value, and cash value for an annuity with a ₱200,000 down payment and 6 years of ₱12,500 semi-annual payments at an interest rate of 10.5% compounded semi-annually. 3. Additional examples are provided to illustrate calculating annual and semi-annual periodic payments for loans and savings plans using the periodic payment formula.

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    LESSON OBJECTIVES:

    1. Define periodic payment


    for ordinary annuities.
    2. Solve for the periodic
    payment of simple
    annuities.

    Find the present value and cash


    value of the following ordinary
    annuity: Down payment of
    ₱200,000 with remaining semi-
    annual payments of ₱12,500 with
    interest rate of 10.5%
    compounded semi-annually for 6
    years.
    Definition of Term:
    1.Regular or Periodic
    Payment, R – the
    amount of each
    payment.
    Periodic Payment R of an Annuity:
    R=F /¿
    R=P /¿
    Where: R – regular payment
    F – future value of an annuity
    P – present value of an
    annuity
    j – interest rate per period
    n – number of payments
    Example:
    1. Paolo borrowed ₱100,000.
    He agrees to pay the
    principal plus interest by
    paying an equal amount of
    money each year for 3 years.
    What should be his annual
    payment if interest is 8%
    compounded annually?
    2. Mr. Ribaya would like to
    save ₱500,000 for his son’s
    college education. How much
    should he deposit in a savings
    account every 6 months for
    12 years if interest is at 1%
    compounded semi-annually?

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