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Ordinary Annuity Calculations Guide

The document presents various financial scenarios involving ordinary annuities, including calculations for future withdrawals, monthly installments, and lump sum payments based on given interest rates and time periods. It includes examples such as making equal annual deposits, determining the value of inheritances, and calculating the remaining principal on loans. Each scenario requires applying principles of time value of money and interest compounding.

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5 views1 page

Ordinary Annuity Calculations Guide

The document presents various financial scenarios involving ordinary annuities, including calculations for future withdrawals, monthly installments, and lump sum payments based on given interest rates and time periods. It includes examples such as making equal annual deposits, determining the value of inheritances, and calculating the remaining principal on loans. Each scenario requires applying principles of time value of money and interest compounding.

Uploaded by

pabo.gagute.up
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ORDINARY ANNUITY

1. Suppose that you make 12 equal annual deposits of P2,000 each into
a bank account paying 8% interest per year. The first deposit will be
made one year from today. How much money can be withdrawn from this bank
account immediately after the 12th deposit?

2. Suppose that you make 12 equal annual deposits of P2,000 each into
a bank account paying 8% interest per year. The first deposit will be
made one year from today. How much money can be withdrawn from this bank
account immediately after the 12th deposit?

3. A man inherited a regular endowment of P100,000 every end of 3


months for x years. However, he may choose to get a single lump of
P3,702,939.8 at the end of 4 years. If the rate of interest was 14%
compounded quarterly, what is the value of x?

4. A man paid a 10% downpayment of P200,000 for a house & lot and
agreed to pay the balance on monthly instalments for 5 years at an
interest rate of 15% compounded monthly. What was the monthly instalment
in pesos?

5. Some future amount F, is equivalent to P2,000 being received every


six months over the next 12 years. The nominal interest rate is 20%
compounded continuously. Find the value of F.

6. A service car whose car price was P540,000 was bought with a down-
payment of P162,000 and monthly instalments of P10,874.29 for 5 years.
What was the rate of interest if compounded monthly?

7. A man inherited a regular endowment of P100,000 every end of 3


months for 10 years. However, he may choose to get a single lump sum
payment at the end of 4 years. How much is this lump sum if the cost of
money is 14% compounded quarterly?

8. What is the future worth of P600 deposited at the end of every


month for 4 years if the interest rate is 12% compounded quarterly?

9. An individual makes five annual deposit of P2000 in a savings


account that pays interest at a rate of 4% per year. One year after
making the last deposit, the interest rate changes to 6% per year. Five
years after the last deposit, the accumulated money is withdrawn from
the account. How much is withdrawn?

10. Raphael Asher borrows P600, 000 at 12% compounded annually,


agreeing to repay the loan in 15 equal annual payments. How much of the
original principal is still unpaid after he has made the 8th payment?

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