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    General Mathematics 2

    Uploaded by

    Ryzel Vonne Dantes
    This document discusses general annuities and provides formulas for calculating future value, present value, and regular contributions of annuity plans. It includes three examples: 1) Calculating the future value after 20 years of a $20,000 annual contribution that earns 6% interest compounded monthly, 2) Calculating the future value after 20 years of a $40,000 annual contribution that earns 12% interest compounded monthly, 3) Calculating the required monthly contribution to achieve a $5,000,000 future value after 10 years with a 5% interest rate compounded quarterly.

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

    General Mathematics 2

    Uploaded by

    Ryzel Vonne Dantes
    236 views11 pages
    This document discusses general annuities and provides formulas for calculating future value, present value, and regular contributions of annuity plans. It includes three examples: 1) Calculating the future value after 20 years of a $20,000 annual contribution that earns 6% interest compounded monthly, 2) Calculating the future value after 20 years of a $40,000 annual contribution that earns 12% interest compounded monthly, 3) Calculating the required monthly contribution to achieve a $5,000,000 future value after 10 years with a 5% interest rate compounded quarterly.

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    GENERAL MATHEMATICS 2

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    This document discusses general annuities and provides formulas for calculating future value, present value, and regular contributions of annuity plans. It includes three examples: 1) Calculating the future value after 20 years of a $20,000 annual contribution that earns 6% interest compounded monthly, 2) Calculating the future value after 20 years of a $40,000 annual contribution that earns 12% interest compounded monthly, 3) Calculating the required monthly contribution to achieve a $5,000,000 future value after 10 years with a 5% interest rate compounded quarterly.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    236 views11 pages

    General Mathematics 2

    Uploaded by

    Ryzel Vonne Dantes
    This document discusses general annuities and provides formulas for calculating future value, present value, and regular contributions of annuity plans. It includes three examples: 1) Calculating the future value after 20 years of a $20,000 annual contribution that earns 6% interest compounded monthly, 2) Calculating the future value after 20 years of a $40,000 annual contribution that earns 12% interest compounded monthly, 3) Calculating the required monthly contribution to achieve a $5,000,000 future value after 10 years with a 5% interest rate compounded quarterly.

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    You are on page 1of 11

    GENERAL MATHEMATICS

    11- STEM 1

    Familia F

    GENERAL ANNUITY

    Group Members:

    Ryzel Vonne Dantes


    Emmanuel Himongon
    Jesail Miles Torres
    Trishia Joeh Gumandal
    Kiana Rose Cagaanan
    Justin Herald Arabes

    GENERAL ANNUITY
    - compounding and payment periods do not happen
    at the same time. For example, a life insurance’s
    contribution is monthly while the interest is
    compounded quarterly.

    Formula for FUTURE VALUE:

    (1  j ) n  1
    FR
    j
    Where:

    F= Future Value
    R= Regular contribution
    n= Number of payments
    j= Equivalent interest rate per interval
    C= number of interest periods per compounding
    interval

    Formula for j:

    j  (1  I )c  1
    Where:

    I= interest rate/compounding period

    number of interst compoundin g per year


    C
    number of payments per year

    Formula for PRESENT VALUE

    1  (1  j )  n
    PR
    j

    Where:

    R= Regular contribution
    n= Number of payments
    j= Equivalent interest rate per interval
    Formula for R (Regular Contribution):

     I 
    R  F 
     (1  I ) N
     1 
    Where:

    R= regular contribution
    F= future value
    I= interest rate
    N= required number of contributions

    EXAMPLES:

    1. TERM LIFE INSURANCE


    Your dad applied for a term life insurance. He got
    a flexible policy because some payment options
    include a policy payout as soon as the target period is
    achieved or upon contingency (death or accident).
    some companies offer insurance products that be
    availed only upon death. Because of this better
    option, your dad decided to avail of Insurance A’s
    flagship insurance product. Your dad’s contribution
    per year is P20,000 that earns 6% compounded
    monthly for 20 years. How much will be paid out to
    your dad after 20 years by Insurance A?

    Solutions:

    number of interst compoundin g per year


    C
    number of payments per year

    C= 12/1
    C=12

    R= 20000 n= 20 I= 0.06
    J=? F=?

    j  (1  I )c  1
    0.06 12
     (1  ) 1
    12
    =1.061677812-1
    j=0.061677812

    (1  j ) n  1
    FR
    j
    (1  0.061677812) 20  1
     20000
    0.061677812
    =20000(37.45600567)
    F=749120.1133

    EXAMPLE 2

    Your eldest brother applied for a term life


    insurance. He decided to avail of Insurance M's
    flexible insurance product. His contribution per
    year is P40 000 that earn 12% compounded
    monthly for 20 years. How much will be given out
    to him after 20 years by Insurance M?

    GIVEN:
    R - P40000
    S - 0.12
    N - 20
    C - 12

    SOLUTION

    12
    12  0.12 
    C j  1   1
    1  12 

    C = 12
    = (1.268250301)-1
    j = 0.1268250301

    FR
    1  j  1
    n

    40000
    1  0.1268250301  1
    20

    = 0.1268250301
    = 40000(78.00158727)
    = P 3,120,063.49

    Example 3

    RETIREMENT PLAN
    Your parents are planning to save for their
    retirement. They target to accumulated P5 000 000in
    10 years. To do this, they want to set aside a portion
    of their salaries and contribute monthly for their
    retirement funds. How much should they contribute
    per month if they will have a chance to invest in an
    annuity that earns 5% compounded quarterly?

    Given:
    F - P5000000
    C - 0.25
    n - 120

    Solution
     I 
    F  R
     (1  I )  1
    N

    0.004140875318
    5000000
    (1  0.004140875318)

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