GENERAL MATHEMATICS G11, QUARTER 2
Name of Learner: __________________________________ Grade Level: _______________
Section: ___________________________________________ Date: _____________________
LEARNING ACTIVITY SHEET NO. ____
I. Introduction
Ask students where people pay by instalment.
Possible answers: Insurance payments, major purchases (e.g., appliances,
property), or loan payments
II. Learning Competency
Illustrates simple and general annuities (M11GM-IIc-1)
Distinguishes between simple and general annuities (M11GM-IIc-2)
Finds the future value and present value of simple annuity (M11GM-IIc-1)
III. Objectives
1. Illustrate simple and general annuities
2. Distinguish between simple and general annuities
3. Find the future value and present value of simple annuity
IV. Discussion
Definition of Terms:
Annuity - a sequence of payments made at equal (fixed) intervals or
periods of time
Payment interval - the time between successive payments
Annuities may be classified in different ways, as follows.
According to Simple Annuity General Annuity
payment interval and An annuity where the An annuity where the
interest period payment interval is the payment interval is not
same as the interest the same as the interest
period. period.
According to time of Ordinary Annuity Annuity Due
payment A type of annuity in A type of annuity in
which the payments are which the payments are
made at the end of made at the beginning
each payment interval. of each payment
interval.
According to duration Annuity Certain Contingent Annuity
An annuity in which An annuity in which the
payments begin and payments extend over
end at definite times. an indefinite
( or indeterminate)
length of time
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
1
Future Value of an Annuity (F) - sum of future values of all
payments to be made during the entire term of the annuity
Present Value of an Annuity (P) - sum of present values of all
payments to be made during the entire term of the annuity
Real-life examples of annuity certain and contingent annuity:
Examples of annuity – instalment basis of paying a car,
appliance, house and lot, tuition fee, etc.
Examples of contingent annuity – life insurance, pension
payments
Examples of annuities using time diagrams:
An instalment payment of an appliance of ₱3000 every
month for 6months
P F
3,000 3,000 3,000 3,000 3,000 3,000
0 1 2 3 4 5 6
6 months
Periodic payment, R = 3,000
Term, t = 6 months
Payment interval = 1 month
Both simple and general annuities have a time diagram for its cash
flow. The main difference is that in a simple annuity the payment
interval is the same as the interest period while in a general
annuity the payment interval is not the same as the interest
period.
Example of simple and general annuity:
Example of a simple annuity – installment payment for an
appliance at the end of each month with interest compounded
monthly
Example of a general annuity – installment payment for an
appliance at the end of each month with interest compounded
annually
Formulas:
Future Value of an Ordinary Annuity (F)
F = R ( 1 + j)n – 1
j
Present Value of an Ordinary Annuity (P)
P = R 1 - ( 1 + j)-n
j
where R is the regular payment
j is the interest rate per period, and
n is the number of payments
2
Note: Remember that an ordinary annuity is an annuity where payments are
made at the end of each period.
Example 1. Suppose Mrs. Remoto would like to save ₱3000 at the end of
each month, for six months, in a fund that gives 9% compounded monthly.
How much is the future value of her savings after 6 months?
Solution:
Given: R = ₱3000
term t = 6 months
interest rate per annum i(12) = 0.09
number of conversions per year m = 12
i 0.09
interest rate per period j = =¿ = 0.0075
m 12
1 year
n = m*t = (12 * 6months ( )) = 6
12months
Find: future value at the end of the term, F
F = R ( 1 + j)n – 1
j
= 3,000 ( 1 + 0.0075)6 – 1
0.0075
F = ₱18,340.89
Example 2. In order to save for her high school graduation, Marie 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?
Solution:
Given: R = 200
t = 6 years
i(12) = 0.250% = 0.0025
m = 12
i 0.0025
j = =¿ = 0.0002083
m 12
n = m*t = (12*6) = 72 periods
Find: F
F = R ( 1 + j)n – 1
j
= 200 (1 + 0.0002083)72 – 1
0.0002083
F = ₱14,507.02
Hence, Marie will be able to save ₱14,507.02 for her graduation.
3
Example 3. (Recall Example #1) Suppose Mrs. Remoto would like to know
the present value of her monthly deposit of ₱3000 when interest is 9%
compounded monthly. How much is the present value of her savings at the
end of 6 months?
Solution:
Given: R = 3000
t = 6 months
i(12) = 0.09
m = 12
i 0.09
j = =¿ = 0.0075
m 12
Find: P
P = R 1 - ( 1 + j)-n
j
= 3000 1 – (1 + 0.0075)-6
0.0075
P = ₱17,536.79
Note: The cash value or cash price is equal to the down payment (if
there is any) plus the present value of the installment payments.
Example 4. Mr. Alden paid ₱200,000 as down payment for a car. The
remaining amount is to be settled by paying ₱16,200 at the end of each
month for 5 years. If interest is 10.5% compounded monthly, what is the
cash price of his car?
Solution:
Given: down payment = ₱200,000
R = 16,200
t = 5 years
i(12) =10.5% = 0.105
m = 12
i 0.105
j = =¿ = 0.00875
m 12
n = m*t = (12*5) = 60 periods
Find: cash value or cash price of the car
The present value of this ordinary annuity is given by:
P = R 1 - ( 1 + j)-n
j
= 16,200 (1 – (1 + 0.00875)-60 )
0.00875
P = ₱753,702.20
Cash Value = Down Payment + Present Value
= 200,000 + 753,702.20
= ₱ 953,702.20
The cash price of the car is ₱ 953,702.20.
4
Example 5. 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?
Solution:
Given: P = ₱100,000
t = 3 years
i(12) =8% = 0.08
m=1
i 0.08
j = =¿ = 0.08
m 1
n = m*t = (1*3) = 3 periods
Find: periodic payment (R)
The cash flow of this annuity is illustrated in the time diagram given below.
P=100,000 R =? R =? R =?
0 1 2 3
Since P = R 1 - ( 1 + j)-n , then
j
R= P
1 - ( 1 + j)-n
j
= 100,000
1 - ( 1 + 0.08)-3
0.08
= ₱38, 803.35
Thus, the man should pay ₱38, 803.35 every year for 3 years.
V. Activities
A. Independent Practice
Directions: Find the present value P and future value F of the following
ordinary annuities. Write your answer on a separate sheet of paper.
1. Quarterly payments of ₱2,000 for 5 years with interest rate of 8%
compounded quarterly.
2. Semi-annual payments of ₱8,000 for 12 years with interest rate of 12%
compounded semi-annually
3. Daily payments of ₱50 for 30 days with interest rate of 20%
compounded daily
5
B. Independent Assessment
Directions: Read each situation carefully to solve each problem. Write
your answer on a separate sheet of paper.
1. Peter started to deposit ₱5,000 quarterly in a fund that pays 1%
compounded quarterly. How much will be in the fund after 6 years?
2. The buyer of a lot pays ₱50,000 cash and ₱10,000 every month for 10
years. If money is 8% compounded monthly, how much is the cash value
of the lot?
3. How much should be invested in a fund each year paying 2%
compounded annually to accumulate ₱100,000 in 5 years?
VI. Assessment
Directions: Read each situation carefully to solve each problem. Write
your answer on a separate sheet of paper.
1. Find the present value and the amount (future value) of an ordinary
annuity of ₱5,000 payable semi-annually for 10 years if money is worth 6%
compounded semi-annually.
2. To pay for his debt at 12% compounded quarterly, Ruben committed for
8 quarterly payments of ₱28,491.28 each. How much did he borrow?
3. A high school student would like to save ₱50,000 for his graduation.
How much should he deposit in a savings account every month for 5.5 years
if interest is 0.25% compounded monthly?
VII. Reflection
Directions: Fill in the blanks. Write your answer on a separate sheet of
paper.
1. A sequence of payments made at equal time periods is a/an
____________
2. A simple annuity in which the payments are made at the end of each
period is a/an ____________
3. An annuity where the payment interval is not the same as the interest
period is a/an ____________
4. An annuity where the payment interval is the same as the interest
period is a/an ____________
5. An annuity in which payments begin and end at definite times is a/an
____________
VIII. References
Teaching Guide for Senior High School General Mathematics, C.P. Garcia
Ave., Diliman, Quezon City; 2016
Prepared by:
Maria Pauline B. Gonzales
Teacher II
San Roque National High School
Note: Practice Personal Hygiene Protocols at all times.
IX. Key to Correction
6
V. Activities
A. Independent Practice
1. F = ₱48,594.74
P = ₱32,702.87
2. F = ₱406,524.60
P = ₱100,402.90
3. F = ₱1,511.98
P = ₱1,487.33
B.
Independent
Assessment 1.
1. F = Annui
₱123,514.09 ty
2.
2. CV = Ordin
ary
VI. ₱874,214.81
Assessment Annui
1. P = ₱74,387.37ty
F = ₱134,351.87
3.
2. ₱200,000 Gene
3. ₱752.46 ral
Annui
VII. Reflections
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4.
Simpl
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Annui
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5.
Annui
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Certa
in
