lesson 5 - annuity due

7/26/2019 Lesson 5 - Annuity Due

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Annuity Due



• Annuity in which periodic payment () is made

at the beginning of each payment interval

• The term of an A-due covers the time frombeginning of the rst payment period up tothe one end of the last payment period.

• The present value of A-due or is the valueon the day of the rst payment

• Ordinary annuity of

• The amount of A-due or the value at the endof the term, is the sum of the accumulatedvalue of the payments at the end of the term.

• Ordinary annuity of

Annuity Due ()



Annuity Due - Formulas

• Finding F when given A

• Finding P when given A

−

−+=

+

1

1)1( 1

i

i A F

n

++−=+−

1)1(1 1

i

i A P

n



Heart wants to buy a computer setwithin a year. She decides to make

regular deposits of P3,000 at the

start of every month, her moneyearning 5 compounded monthly.

How much will she have in her

savings a year after!



How much should be invested in a

fund at the beginning of each year

in order to accumulate P"0,000 at

the end of #0 years if the fund is

invested at 5 converted annually!



$ind the cash e%uivalent of an

item that was purchased for

P#",000 down payment and

P&,500 at the beginning of eachsi' months for 3( years, if

interest is 5( compounded

semi)annually.



*ette bought a brand new car. +hat

is the cash price of the car if she has

to make 3 %uarterly payments of

P&&,000 at the beginning of each

%uarterly period at #0.5

compounded %uarterly!



-onio wants to have P5,000 for histraveling e'penses four years from

now. How much must he save at the

beginning of each %uarter startingnow, if he gets compounded

%uarterly interest on his savings!



How much should /nalyn deposit atthe beginning of every three months

if the bank pays #& compounded

%uarterly to have a total amount of P#, 0"5 after three years!



-he annual premium on a life

insurance policy is P"",000 payable

in advance. +hat would be the

monthly premium, if the interest

rate is based on compounded

monthly!



1n purchasing a high %uality handy

camera, the buyer agreed to pay P,325 at the beginning of each

months for " years, with the first

payment due on the date of

purchase. 1f the interest rate is

#.5 converted semiannually, find

the cash price of the camera.



Seat +ork

#.4 / loan of P500,000 was signed by i6a

who promised to pay it at the beginningof each month for 5 years. 1f money is

worth #& compounded monthly, what

will be the total sum paid by i6a!

&.4 How much should 7obert pay at the

beginning of every si' months at #0

compounded semi 8 annually to

accumulate P&", 0"5 for " years!

lesson 5 - annuity due

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