SELF-INSTRUCTIONAL PACKETS

GENERAL MATHEMATICS GRADE 11

WEEK 2

I. OBJECTIVES

A. Content Standards
The learner demonstrates understanding of key concepts of simple and compound
annuities.
B. Performance Standards
The learner is able to investigate, analyze and solve problems involving simple and
compound annuities using appropriate business and financial instruments.
C. Learning Competencies
The learner
1. illustrates simple and general annuities; (M11GM-IIc-1)
2. distinguishes between simple and general annuities; (M11GM-IIc-2)
3. finds the future value and present value of both simple annuities and general
annuities; (M11GM-IIc-d-1)
4. calculates the fair market value of a cash flow stream that includes an annuity;
(M11GM-IId-2) and
5. calculates the present value and period of deferral of a deferred annuity. (M11GM-
IId-3)
D. Objectives
At the end of the lesson, the learners should be able to:
1. illustrate simple and general annuities;
2. distinguish between simple and general annuities;
3. find the future value and present value of both simple annuities and general
annuities;
4. calculate the fair market value of a cash flow stream that includes an annuity;
5. calculate the present value and period of deferral of a deferred annuity; and
6. show appreciation by solving problems involving simple and compound annuities.

II. CONTENT
SIMPLE AND GENERAL ANNUITY

Learning Resources
A. Reference
Learner’s Material in General Mathematics, pp. 168-239

III. PROCEDURES

A. Reviewing previous lesson or presenting the new lesson

Let’s play a game! The title of this game is GUESS THE LOGO. Identify the name of the
company/organization under each logo/symbols.

Did you enjoy the game? Now, check your answer on page 31.

What comes in your mind when you see these logos/symbols? Have you thought about
insurance? Savings? Loans? Installment? Interest? Pension? or other related words. Yes, you

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 got it right! These words are connected to our lessons this week. We will be talking about
annuity.
Annuity is a series of equal payments made at equal time intervals, subject to a fixed
compound interest rate. You will enjoy this chapter because this is very relevant to our life.

B. Establishing a purpose for the lesson

Founded in 1957, the Philippine Social Security System (SSS) is a social

insurance program for employees in the Philippines. All income earning SSS
members are required to contribute monthly into the fund, the amount depends
on their salary bracket. In exchange for the said monthly contributions,
members will enjoy insurance benefits such as sickness, maternity, disability,
retirement, death and funeral and salary loan.

C. Presenting examples/instances of the new lesson

Lesson 5: Introduction to Annuities

WHAT IS AN ANNUITY?

● A series of equal payments made at

equal time intervals, subject to a fixed
compound interest rate.
● A financial contract between a person
(the annuitant) and an insurance
company (the insurer) for receiving and
disbursing money for the annuitant or
the beneficiary of the annuitant.

HOW TO PURCHASE AN ANNUITY?

● An annuity is purchased by making either a single

lump-sum payment or a series of periodic payments.
Under the terms of the contract, the insurer agrees to
make a lump-sum payment or periodic payments to
you beginning at some future date. This investment
option is a long-term investment option that is
commonly used for retirement planning or as a college
fund for small children.
● Penalties are normally applied if funds are withdrawn
before a time specified in the agreement.
Image retrieved from:
https://www.pinterest.ph/pin/517632550891522102/?d=t&mt=l
ogin

CLASSIFICATIONS OF ANNUITY?

ANNUITY CERTAIN ANNUITY UNCERTAIN

-an annuity in which -an annuity in which the
payments begin and end at payments extend over an
ACCORDING TO definite times. indefinite (or indeterminate)
DURATION length of time.
Ex: installment basis of Ex: life insurance, pension
paying a car, appliance, payments
house and lot, tuition fee, etc.

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 SIMPLE ANNUITY GENERAL ANNUITY
-an annuity where the -an annuity where the
payment interval is the same payment interval is different
as the compounding period as the compounding period
ACCORDING TO PAYMENT
INTERVAL AND Ex: The installment payment Ex: The installment payment
COMPOUNDING PERIOD for an appliance is ₱3,000 at for an appliance is ₱3,000 at
the end of each month with the end of each month with
0.2% interest compounded 0.2% interest compounded
monthly. annually.

ORDINARY ANNUITY ANNUITY DUE

- annuity in which the periodic - annuity in which the periodic
payment is made at the end of payment is made at the
ACCORDING TO TIME each payment interval beginning of each payment
PAYMENT INTERVAL interval
Ex: Jun’s monthly mortgage Ex: The rent for the apartment
payment is ₱35,000 at the is ₱7,000 and due at the
end of each month. beginning of each month.

Do you know other annuities that you/ your siblings/parents/guardians have? Try to
classify them according to different categories. I know you can do it!

Now it’s your time to do your task! Try to answer the next challenge. Good luck!

2.1
DIRECTIONS: Match Column A (description/definition/examples) to Column B (Terms). Copy
ALL and write the answers on your Gen Math notebook.

COLUMN A COLUMN B
______1. A series of equal payments made at regular time intervals. A. annuitant
______2. Simang receives her monthly pension from SSS. What do B. annuity
you call Simang? C. annuity certain
______3. Cielo pays for his car loan every beginning of the month. D. annuity due
______4. The best examples of this classification according to E. annuity
duration are house loan and cellphone installment. uncertain
______5. Joey deposits 100 pesos daily in a bank with interest F. general annuity
compounded monthly. G. insurer
______6. Seller receives payments at the end of the week. H. ordinary annuity
______7. Examples of this classification are life insurance and I. simple annuity
pension payments.
______8. Mondragon invests Php 1M yearly with interest
compounded yearly.

Score Description
Now, check your work by turning to the key to
8 Naol perfect! correction. How many correct answers did you
get? Rate your result using the table on the left
6-7 Bongga ka! side. If your score is at least 4 out of 8, you
may now proceed to the next part of the
4-5 Pwede na besh
discussion
0-3 Practice pa more on sec J
.
NOTE: Grade 11 students will only focus on ordinary annuity (not annuity due) and
annuity certain (not annuity uncertain). Simple and General Annuities will be discussed.

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
NOTE: Please download and use this free scientific calculator in case you need one.
https://play.google.com/store/apps/details?id=advanced.scientific.calculator.c
alc991.plus&fbclid=IwAR130LU1YghlQ7Yx0p78Mqvau1h6xqIzodfwfCRqriWc
1gE8jtYk6_GZnz8

D. Discussing new concepts and practicing new skills #1

Lesson 6: Simple Ordinary Annuity
In solving for every worded-problems, we need to determine what classification of annuity
they belong to. In this lesson, the worded-problems are simple ordinary annuity.

REMEMBER ME!
✔ Term of annuity (t), time (in years) between the first payment interval and last payment
interval.
✔ Regular/ Periodic Payment (R), the amount of each payment.
✔ 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 (P), sum of present values of all the payment to be made during the
entire term of the annuity.

HINT!
To determine if it is F, P or R is missing, here are the keywords
✔ Regular/ periodic payment (R)- regular payment (monthly, semi-annually, quarterly,
annually), regular investment
✔ Future value of Annuity (F)- accumulated amount, amount at the end, future amount,
money after
✔ Present Value (P)- present value like purchasing appliances through installment
basis(amount purchased today), cash price is involve, borrowed amount,
Annuities may be illustrated using a cash flow diagram. This diagram can be used to
determine the future value or present value of an annuity.

Problem 1: Suppose Mrs. Remoto would like to save ₱3, 000 every month in a fund that gives
9% compounded monthly. How much is the amount or future value of her savings after 6 months?
Given: term (t) = 6 months
Interest rate (r) = 9% or 0.09
Number of conversion (m)= 12 *review the conversion period last week
𝑟 0.09
Periodic rate (i) 𝑖 = 𝑚 = 12 = 0.0075
Solution:
Step 1: Illustrate the cash flow in a time diagram

Step 2: Find the future value of all payments at the end of term (t=6 months)

Step 3: Add all the future values obtained from the previous step.
3000 = 3000
3000 (1 + 0.0075) = 3022.50
3000 (1 + 0.0075)2 = 3045.169
3000 (1 + 0.0075)3 = 3068.008
3000 (1 + 0.0075)4 = 3091.018
3000 (1 + 0.0075)5 = 3114.20
F = 18340.89
Final Answer: Therefore, the amount of this annuity is ₱18, 340.89

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 Solving by illustrating cash flow diagrams is easy to understand but harder to do especially
when it has a longer term. There is another solution which you can use which makes the solution
easier. Let us try to use the formula in computing for the final value or present value of an annuity.

Future Value of Simple Ordinary Annuity where

(1+𝑖)𝑛 −1 𝐹∙𝑖 F – future value
𝐹 = 𝑅[ ] and 𝑅 = (1+𝑖)𝑛 −1 P – present value
𝑖
R – regular payment or periodic payment
Present Value of Simple Ordinary Annuity i – periodic rate; i = r/m
1−(1+𝑖)−𝑛 𝑃∙𝑖 n – total no. of conversions / total no. of
𝑃 = 𝑅[ ] and 𝑅 = payments; n = (m)(t)
𝑖 1−(1+𝑖)−𝑛
t – term of annuity in years

Problem 2: A bank advises a couple to invest ₱20,000 at the end of each year for 5 years in an
account that pays interest at 10% compounded annually, to have the amount for the down
payment of a house and lot. How much money would they have in their account after 5 years?
Given: R = 20 000
r = 10% or 0.10
m =1 *review compounding period (annually)
n = (𝑚 )(𝑡) = (1)(5) = 5 *term should always expressed in year
Solution:
𝑟 𝑛
(1+ ) −1
𝑚
𝐹 = 𝑅[ 𝑟 ] Use Future Value Formula since we are computing for F
𝑚
0.10 5
(1+ ) −1
1
𝐹 = 20000[ 0.10 ] Substitute the given
1
0.61051
𝐹 = 20000( ) Use PEMDAS rule-simplify the numerator and denominator
0.10
𝐹 = 20000(6.1051) Simplify the expression inside the parenthesis
𝐹 = ₱122, 102 Final Answer for future value

Problem 3. Adonis purchased a laptop through installment payment. He would like to know the
present value of his monthly payment of ₱3,000 when interest is 9% compounded monthly. How
much is the present value of his payments at the end of 6 months?
Given: R = 3 000
r = 9% or 0.09
m = 12 *review compounding period (monthly)
6
n = (𝑚 )(𝑡) = (12) (12) = 6 *6 months = 6/12 year
Solution:
𝑟 −𝑛
1−(1+ )
𝑚
𝑃 = 𝑅[ 𝑟 ] Use Present Value Formula since we are computing for P
𝑚
0.09 −6
1−(1+ )
12
𝑃 = 3000[ 0.09 ] Substitute the given
12
0.04384198223
𝑃 = 3000( 0.0075 ) Use PEMDAS rule-simplify the numerator and denominator
𝑃 = 3000(5.84559763) Simplify the expression inside the parenthesis
𝑃 = ₱17,536.79 Final Answer for Present Value

Problem 4: How much should teacher Jessie invest yearly in a cooperative fund that is paying
2% interest compounded annually to accumulate ₱100,000 in 4 years?

Given: F = 100 000

r = 2% or 0.02
m = 1 *annually
n = (𝑚 )(𝑡) = (1)(4) = 4

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
Solution:
𝑟
(𝐹)( )
𝑚
𝑅 = 𝑟 𝑛
Use Regular Payment Formula for Future Value
(1+ ) −1
𝑚

0.02
(100000)( )
1
𝑅 = 0.02 4
Substitute the given
(1+ ) −1
1

2000
𝑅 = Use PEMDAS rule-simplify the numerator and denominator
0.08243216

𝑅 = ₱24,262.38 Final Answer for Regular payment

REMEMBER ME!
Cash Value or Cash Price
The cash value or cash price is equal to the down payment (if there is any) plus the present
value of the installment payments.
Cash Value = Down Payment + Present Value

Problem 5: Renato 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?
Given: down payment = 200 000
R = 16,200
r = 10.5% or 0.105
m = 12 *monthly
n = (𝑚 )(𝑡) = (12)(5) = 60
Solution:
Cash Price = Down Payment + Present Value
𝑟 −𝑛
1−(1+ )
𝑚
𝑃 = 𝑅[ 𝑟 ] First, Compute for Present Value
𝑚
0.105 −60
1−(1+ )
12
𝑃 = 16200 [ 0.105 ] Substitute the given
12
0.40709223376
𝑃 = 16200 [ 0.00875 ] Simplify the numerator and denominator
𝑃 = 16200[46.52482672] Simplify the expression inside the parenthesis
𝑃 = ₱753,702.20 Computed Present Value (Not yet the final answer)

Cash Price = Down Payment + Present Value Use the formula for Cash Price
Cash Price = 200 000 + 753,702.20 Substitute the given
Cash Price = ₱953,702.20 Final Answer for Cash Price

Problem 6: Using the answer in Problem #5, how much will Renato save if he will buy the car in
cash instead of installment?

Given: Cash Price = 953 702.20

R = 16 200
n = 60 payments

Solution:
Interest = (R)(n)-Cash Price
Interest = (16200)(60)- 953 702.20 Substitute the given
Interest = 972,000- 953 702.20 Use PEMDAS rule
Interest = ₱18,297.80 Final Answer for Interest (Amount Saved)

Solving worded-problems like simple ordinary annuity needs more practice. We must be
careful of reading and understanding every problem, it may be tricky.

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 Now it’s your time to do your task! Try to answer the next challenge. Good luck!

2.2
DIRECTIONS: Solve the following problems about simple ordinary annuity using GSA (Given,
solution and answer) format. Copy ALL and write the answers on your Gen Math notebook.
Given = 1 point Solution = 2 points Answer = 2 points

1-5) Ken is paying ₱2,500 every 3 months for the amount he borrowed at an interest rate of 8%
compounded quarterly. How much did he borrow if he agreed that the loan will be paid in 2
years and 6 months?
6-10) A store advertises a motorcycle for ₱3,000 down payment and ₱3,000 per month for 15
months. If the interest is 15% compounded monthly, what is the actual value of the motorcycle?

Score Description

10 Naol perfect! Now, check your work by turning to the key to

correction. How many correct answers did you get?
7-9 Bongga Ka! Rate your result using the table on the left. If your
score is at least 5 out of 10, you may now proceed
4-6 Pwede na besh to the next part of the discussion.
0-3 Practice pa more on sec J

Lesson 7: General Ordinary Annuity

In this lesson, the strategy in solving the general ordinary annuity is just the same as the
simple annuity. It just differs in the formula. Always remember that general annuity is an annuity
which payment interval is different from compounding period.

Future Value of where

General Ordinary Annuity F – future value
𝑝
(1+𝑖) 𝑛 −1 𝐹 [(1+𝑖) 𝑐 −1] P – present value
𝐹 = 𝑅 [(1+𝑖)𝑝/𝑐−1] and 𝑅 = (1+𝑖)𝑛 −1 R – periodic payment
i – periodic rate; i = r/m
Present Value of n – total no. of conversion periods; n= mt
General Ordinary Annuity t – term in years
𝑝 p – no. of months in a payment interval
1−(1+𝑖)−𝑛 𝑃 [(1+𝑖) 𝑐 −1]
𝑃 = 𝑅 [(1+𝑖)𝑝/𝑐 ] and 𝑅 = c – no. of months in a compounding period
−1 1−(1+𝑖)−𝑛

meaning m p c

Annually or Yearly once a year 1 12 12

Semi-Annually Every 6 months 2 6 6

Quarterly Every 3 months 4 3 3

Monthly Every 1 month 12 1 1

Problem 1: Mel started to deposit ₱1,000 monthly in a fund that pays 6% compounded quarterly.
How much will be in the fund after 15 years?
Given: R = 1000
r = 6% or 0.06
m =4 *compounded quarterly
n = (𝑚 )(𝑡) = (4)(15) = 60
p =1 *payment interval is monthly
c =3 *compounding period is quarterly

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 𝑟 𝑛
(1+ ) −1
𝑚
Solution: 𝐹 = 𝑅[ 𝑝 ] Use the Future Value Formula
𝑟
(1+ ) 𝑐 −1
𝑚
0.06 60
(1+ ) −1
4
𝐹 = 1000 [ 1 ] Substitute the given
0.06 3
(1+ ) −1
4
2.443219776−1
𝐹 = 1000 [ ] Simplify the expression. Use PEMDAS Rule
1.004975206−1
1.443219776
𝐹 = 1000 [0.004975206 ] Simplify the expression.
𝐹 = 1000[290.0824159] Simplify fraction.
𝐹 = ₱290, 082.42 Final Answer for Future Value

Problem 2: Eugene borrowed money from Nicole. If he pays ₱40,000 each year for 3 years, how
much money did he borrow if interest is 8% compounded quarterly?
Given: R = 40 000
r = 8% or 0.08
m =4 *compounded quarterly
n ( )( ) (
= 𝑚 𝑡 = 4 3 = 12)( )
p = 12 *payment interval is yearly
c =3 *compounding period is quarterly
Solution:
𝑟 −𝑛
1−(1+ )
𝑚
𝑃 = 𝑅[ 𝑟 𝑝/𝑐
] Use Present Value Formula
(1+ ) −1
𝑚
0.08 −12
1−(1+ )
4
𝑃 = 40000 [ 0.08 12/3
] Substitute the given
(1+ ) −1
4
1−0.7884931756
𝑃 = 40000 [ ] Use PEMDAS Rule, simplify the expression
1.08243216−1
0.2115068244
𝑃 = 40000 [ 0.08243216 ] Subtraction
𝑃 = 40000[2.565828973] Simplify the fraction
𝑃 = ₱102, 633.16 Final Answer for Present Value

Just like in simple ordinary annuity, and other worded-problems, all we have to do is to
make sure we understand the problem. It might be tricky, yet easy when you follow the GSA
(Given, solution, answer) format and also organize your solutions. Just be careful in using your
calculator. Now, answer the challenge below.

2.3
DIRECTIONS: Solve the following problems about general ordinary annuity using GSA
(Given, solution and answer) format. Copy ALL and write the answers on your Gen Math
notebook.
Given = 1 point Solution = 2 points Answer = 2 points

1-5) Teacher Kaye is saving ₱2,000 every month by depositing it in a bank that gives an
interest of 1% compounded quarterly. How much will she save in 5 years?
6-10) Vladimir purchased a new car for ₱99,000 down payment and ₱15,000 every month in
1 year. If the payments are based on 7% compounded quarterly what is the total cash price of
his car?
Score Description

10 Naol perfect! Now, check your work by turning to the key to

correction. How many correct answers did you get?
7-9 Bongga ka! Rate your result using the table on the left. If your
score is at least 5 out of 10, you may now proceed to
4-6 Pwede na besh the next part of the discussion.
0-3 Practice pa more on sec J

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E. Discussing new concepts and practicing new skills #2

Lesson 8: Deferred Annuity

DEFINITIONS
Deferred Annuity
An annuity that does not begin until a given time interval has passed.
Period of Deferral
Length of time between the purchase of an annuity and the start of the payments. The
first payment is made one period after the period of deferral.

Examples of deferred annuities:

1. A credit card company offering its clients to purchase today but to start paying monthly
with their choice of term after 3 months. In this situation, the payments were deferred
because the card purchaser will only start paying after 3 months.
2. A real estate agent is urging a condominium unit buyer to purchase now and start paying
after 3 years when the condominium is ready for occupancy. Condominium units that are
still under construction can already be sold but the buyer will only start paying when the
unit is finished.
3. A worker who has gained extra income now and wants to save his money so that he can
withdraw his money monthly starting on the day of his retirement from work. Retirement
plans are bought while you are still young and working, but you will just receive the
payments after your retirement.

UNDERSTANDING DEFERRED ANNUITIES

Analyze the two annuities with different payment schemes below.

A. Poy bought a refrigerator thru installment. He makes monthly payment of ₱ 2,500 for 1 year
starting at the end of the month.

Payment

Month

B. Basha bought a refrigerator thru installment from a different store. She makes monthly payment
of ₱2,500 for 1 year starting at the end of the fourth month.
Payment

Month

By analyzing the cash flow diagrams of the two annuities, you can see that both Poy and
Basha will have to pay ₱2,500 monthly for 1 year. How much is the total amount that they will pay
then? That’s right, it is ₱ 2,500 x 12 months = ₱ 30,000.

But if you will look more closely, in situation A, Poy started paying right after the first month.
In situation B, Basha just started paying at the end of the fourth month. This means that the period
of deferral is 3 months because no payments were made during this period. The annuity with this
type of payment scheme is called deferred annuity.

If you will buy a refrigerator, would it be better to have the payments deferred or not? If
you will buy today, the cash price of the refrigerator in situation B is cheaper than in situation A.
But if you don’t have the money yet, you can choose a deferred annuity. But remember, payments
made at a later date have higher interests.

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
FINDING THE NUMBER OF DEFERRED PERIODS (d)
Find the number of deferred periods (d) for each situation. The payment period and
deferred period should have the same unit (quarterly, monthly, annually, etc).

a. Annual payments of ₱ 8,000 for 10 years that will start 5 years from now.
Ans. d = 4 (years)
Remember, first payment is made one period after the period of deferral.
Since the first yearly payment was made after 5 years, the deferred period is 5 - 1 = 4.
b. Quarterly payments of ₱ 5,000 for 3 years that will start after two years.
Ans. d = 7 (quarters)
The first quarterly payment will start after 8 quarters (2 years). So, 8-1 is 7.
Note: Each year has 4 quarters and each quarter has 3 months.
c. Monthly payments of ₱ 2,000 for 5 years that will start 7 months from now.
Ans. d = 6 (months)
The first monthly payment will start after 7 months. So, 7-1 is 6.

d. Semi-annual payments of ₱ 60,000 for 3 years that will start after 5 years.
Ans. d = 9 (semi-annual periods)
The first semi-annual payment will start after 10 semi-annual periods (5 years). So, 10 -1
is 9. Note: Each semiannual period is equivalent to 6 months.

FUTURE VALUE AND PRESENT VALUE OF A DEFERRED ANNUITY

The following formulas will be used for deferred simple ordinary annuities.
Future Value of Deferred Annuity where
(1 + 𝑖)𝑛 −1 F – future value
P – present value
𝐹 = 𝑅[ ] R – regular payment or periodic payment
𝑖 i – periodic rate; i = r/m
Present Value of Deferred Annuity
m – frequency of conversion per year
−(1 + 𝑖 )−(𝑛+𝑑) + (1 + 𝑖 )−𝑑 n – total no. of conversion periods; n= mt
𝑃 = 𝑅[ ] t – term in years
𝑖 d – no. of deferred periods

If you can still remember, the future value formula above was used for simple ordinary
annuities. The same formula will be used for deferred annuities. In this module, we will just focus
on the present value of deferred annuities.

Problem 1. Basha bought a refrigerator thru installment from a different store. She makes monthly
payment of ₱2,500 for 1 year starting at the end of the fourth month. If the interest rate is 9%
compounded monthly, how much is the present value of the refrigerator?
Given: −(1+𝑖)−(𝑛+𝑑) +(1+𝑖)−𝑑
Solution: 𝑃 = 𝑅[ ]𝑃 =
R = 2500 𝑖
r = 0.09 −(1.0075) −(12+3) +(1.0075) −3
2500 [ ]
t=1 0.0075

m = 12 To input the numerator in the calculator, press:

d = 3 months -(1.0075)^-(12+3)+(1.0075)^(-3) = 0.08386079038
0.08386079038
i = r/m = 0.09/12 = 0.0075 𝑃 = 2500 ( 0.0075
)
n = (m)(t) = (12)(1) = 12 𝑃 = 2500(11.18143871704)
P = ₱27,953.60
Thus, the cash price of the refrigerator is ₱27,953.60.

Discussion: Since the formula is long, you might have a hard time inputting all the values and
operations in the calculator at once. Alternatively, you can “chop-chop” or simplify first the values
in the bracket (start from the numerator) until you get the answer. Be sure to write all the decimal
values when using the chop-chop method. You will only round off to two decimal places on the
final answer.

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
Problem 2: Joshua bought an insurance that will pay him ₱ 5,000 per quarter for 10 years and
with an interest rate of 6% compounded quarterly. If the period of deferral is 5 years, how much
did he buy the insurance?
Given: −(1+𝑖)−(𝑛+𝑑) +(1+𝑖)−𝑑
Solution: 𝑃 = 𝑅[ ]
R = 5000 𝑖
r = 0.06 −(1.06)−(40+20) + (1.06)−20
t = 10 𝑃 = 5000 [ ]
0.06
m=4 0.3331744515
d = (5)(4) = 20 quarters 𝑃 = 5000 ( )
0.06
i = r/m = 0.06/4 = 0.015 𝑃 = 5000(22.21163010026)
n = (m)(t) = (4)(10) = 40 P = ₱111,058.15
Thus, the insurance was bought for ₱111,058.15.
Discussion: The period of deferral was already stated in the problem (5 years). But since the
payment is made quarterly, you need to convert 5 years into quarters. Each year has 4 quarters,
so in 5 years, there are 5 x 4 = 20 quarters.

F. Developing mastery
2.4
GENERAL DIRECTIONS: Solve the following problems using GSA (Given, solution and answer).
Copy ALL and write the answers on your Gen Math notebook.
Given = 1 point Solution = 2 points Answer = 2 points

SIMPLE ORDINARY ANNUITY

1-5.) Shirl started to deposit ₱18,000 semi-annually in a fund that pays 5% compounded semi-
annually. How much will be in the fund after 10 years?

GENERAL ORDINARY ANNUITY

6-10) In order to have a fund of ₱1,000,000 at the end of 12 years, equal deposits every six months
must be made. Find the semi-annual payment if interest is at 6% compounded annually.

DEFERRED ANNUITY
11-15) A savings account may allow the owner to withdraw ₱30,000 semi-annually for 3 years
starting at the end of 3 years. How much is the savings if the interest rate is 4% compounded
semi-annually?
16-20) A cellular phone may be purchased at ₱1,500 payable monthly for 18 months. The first
payment is due after 3 months. How much is the cellular phone if the interest rate is 12%
compounded monthly?
Score Description

20 Naol perfect!
Now, check your work by turning to the key to
13-19 Bonggaka! correction. How many correct answers did you
get?
8-12 Pwede na besh

0-7 Practice pa more on sec J

G. Finding practical applications of concepts and skills in daily living

Did you know that annuities have many applications in real life? Here are
some examples:
✔ Installment payment for appliances, gadgets, etc.
✔ Loan payment for house, lot, car, etc.
✔ Insurance and pension payments
H. Making generalizations and abstractions about the lesson

What is the difference between simple ordinary annuities to general annuities to deferred
annuities?

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 SIMPLE ORDINARY GENERAL ORDINARY DEFERRED ANNUITIES
ANNUITIES ANNUITIES

These are annuities where These are annuities where These are annuities where
the payment interval is the the payment interval is not the payments start after a
same as the compounding same as the compounding certain period (period of
period in which the periodic period in which the periodic deferral).
payment is made at the end payment is made at the end
of each payment interval. of each payment interval.

Ex: Christian opted to pay an Ex: Christian opted to pay an Ex: Christian opted to pay an
equal payment at the end of equal payment at the end of equal payment starting at the
the month at 5% compounded the month at 5% compounded end of the fourth month at
monthly. quarterly. 5% compounded monthly.

I. Evaluating learning
GENERAL DIRECTIONS: This part is recorded and graded. Copy ALL the given using this format
on a separate yellow sheet of paper. The yellow paper will be submitted to your Math teacher
on the day of the scheduled retrieval.

ACTIVITY 2.1 IN GENERAL MATHEMATICS

(WEEK 2)
Name: _________________Section: _________ Parent’s Signature: ___________________

DIRECTIONS: Determine whether the following situation is classified under simple ordinary
annuity, general ordinary annuity or deferred annuity. Then, solve using the GSA (given,
solution, answer) format. 10 points each.

Type of Annuity =2 points Given= 2 points Solution= 3 points Answer = 3 points

WRITTEN WORK

1-10. Suppose Mr. Claude would like to save ₱10,000 every month in a fund that gives 9%
compounded monthly. How much is the amount or future value of her savings after 6 months?
Show using a cash flow-diagram.

11-20. Shirl deposits ₱10,000 every 3 months in a time deposit account giving 2% interest rate
compounded quarterly. How much will she save at the end of 5 years? How much interest is
earned in all deposits?

21-30. A teacher will be retiring in 15 years. At her retirement, she wants to save a fund of one
million pesos. He invested at a fund that gives 4% compounded semi-annually. How much should
she deposit every 6 months in order to have this amount upon retirement?

31-40. Cris is planning to buy a house and lot. The required down payment is ₱300,000. His
balance will be paid at ₱15,200 every month for 20 years. If money is 12% compounded monthly,
how much is the cash value of the house and lot?

PERFORMANCE TASK

41-50. Mr. Canlapan deposited his money from selling his old vehicle. The fund would allow him
to withdraw ₱45,000 semi-annually for 5 years starting at the end of 1 year. How much is the
amount deposited if the interest rate is 2% compounded semi-annually?

51-60. Mrs. Paro invests ₱5,000 every 3 months at an interest rate of 6 % compounded annually.
How much will she have in this investment at the end of 6 years? How much interest is earned?

61-70. Roy purchased a house and lot by paying a down payment of ₱400,000 and ₱20,000
monthly for 25 years. The first payment is due after one year. How much is the cash price of the
house and lot if the interest rate is 10% compounded monthly?

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
J. Additional activities for application or remediation

GENERAL DIRECTIONS: Copy ALL and write the answers on your Gen Math notebook.

Remedial Activity 2.1: INTRODUCTION OF ANNUITIES

DIRECTIONS: Match Column A (description/definition/examples) to Column B (Terms). Copy
ALL and write the answers on your Gen Math notebook.

COLUMN A COLUMN B
______1. Simang receives her monthly pension from SSS. What do A. annuitant
you call SSS? B. annuity
______2. Carlo pays for his car loan every end of the month. C. annuity
______3. A series of equal payments made at regular time intervals certain
______4. Joey deposits 100 pesos weekly in a bank with interest D. annuity due
compounded weekly. E. annuity
______5. Seller receives payments every start of the week. uncertain
______6. Examples of this classification are life insurance and F. general
pension payments. annuity
______7. Mondragon invests Php 1M yearly with interest compounded G. insurer
monthly. H. ordinary
______8. Best examples of this classification according to duration are annuity
house loan and cellphone installment. I. simple annuity

Remedial Activity 2.2: SIMPLE ORDINARY ANNUITY

DIRECTIONS: Solve the following problems about simple ordinary annuity using GSA (Given,
solution and answer) format. Copy ALL and write the answers on your Gen Math notebook.
Given = 1 point Solution = 2 points Answer = 2 points

1. Ken is paying ₱3,500 every 3 months for the amount he borrowed at an interest rate of 12%
compounded quarterly. How much did he borrow if he agreed that the loan will be paid in 3
years?
2. A store advertises a motorcycle for ₱5,000 down payment and ₱2,500 per month for 18
months. If the interest is 15% compounded monthly, what is the actual value of the
motorcycle?

Remedial Activity 2.3: GENERAL ORDINARY ANNUITY

DIRECTIONS: Solve the following problems about general ordinary annuity using GSA (Given,
solution and answer) format. Copy ALL and write the answers on your Gen Math notebook.
Given = 1 point Solution = 2 points Answer = 2 points

1. Teacher Kakay is saving ₱1,500 every month by depositing it in a bank that gives an interest
of 1% compounded semi-annually. How much will she save in 8 years?
2. Vladimir purchased a new car for ₱90,000 down payment and P12,000 every month in 1 year.
If the payments are based on 7.5% compounded quarterly what is the total cash price of his
car?

Remedial Activity 2.4: DEFERRED ANNUITY

1. Find the present value of a deferred annuity of ₱1,500 every year for 8 years that is deferred
for 3 years if money is worth 6% compounded annually.
2. What amount should you invest now if you want to receive payments of ₱4,000 semi-annually
for eight years with the receipt of the first payment three years from now? Assume that money
earns 5% compounded semi-annually.
APPENDIX A
KEY TO CORRECTION

SECTION A. GUESS THE LOGO

1. Home Development Mutual Fund or Pag-ibig Fund
2. GSIS or Government Service Insurance System
3. SSS or Social Security System
4. Metrobank or Metropolitan Bank and Trust Company
5. Home Credit Philippines

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
CHALLENGE 2.1 INTRODUCTION TO ANNUITIES
1. B 5. F
2. A 6. H
3. D 7. E
4. C 8. I

CHALLENGE 2.2 SIMPLE ORDINARY ANNUITY

1-5)Given: 𝑟 −𝑛
1−(1+ )
𝑚
R = 2500 Solution:𝑃 = 𝑅[ 𝑟 ]
𝑚
r = 8% or 0.08
0.08 −10
m =4 1 − (1 + )
𝑃 = 2500[ 4 ]
n = (𝑚 )(𝑡) = (4)(2.5)=10 0.08
4
0.1796517001
𝑃 = 2500( )
0.02
𝑃 = ₱22, 456.46

6-10) Given: 𝑟 −𝑛
1−(1+ )
𝑚
R = 3000 Solution:𝑃 = 𝑅[ 𝑟 ]
𝑚
r = 15% or 0.15
0.15 −15
m = 12 1 − (1 + 12 )
n = (𝑚 )(𝑡) = (12)(1.25)=15 𝑃 = 3000[ ]
0.15
down payment= 3000 12
0.1700068241
𝑃 = 3000( )
0.0125
𝑃 = ₱40, 801.64

Cash Value= 3000+40801.64

Cash Value= 43, 801.64

CHALLENGE 2.3 GENERAL ORDINARY ANNUITY

1-5) Given: R = 2000 Solution:
r = 1% or 0.01 𝑟 𝑛
(1+ ) −1
m =4 𝐹 = 𝑅[ 𝑚
𝑝 ]
n = (𝑚 )(𝑡) = (4)(5) = 20 𝑟
(1+ ) 𝑐 −1
𝑚
p =1
c =3 0.01 20
(1 + ) −1
𝐹 = 2000 4
1
0.01 3
[ (1 + 4 ) − 1 ]
0.05120550328
𝐹 = 2000 [ ]
0.00083263985
𝐹 = 122, 995.56

6-10) Given: R = 15000 Solution:

r = 0.07 𝑟 −𝑛
1−(1+ )
𝑚
m =4 𝑃 = 𝑅[ 𝑟 𝑝/𝑐
]
(1+ ) −1
n = (4)(1)=4 𝑚
0.07 −4
p =1 1−(1+
4
)
c =3 𝑃 = 15000 [ 0.07 1/3
]
(1+ ) −1
4
down payment =99,000 0.06704149444
𝑃 = 15000 [ ]
0.00579963257
𝑃 = 173 394.15
Cash Price= 99000+173 394.15
Cash Price= 272 294.16
F. DEVELOPING MASTERY
CHALLENGE 2.4

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 1-5) Given: R = 18 000 𝑟 𝑛
(1+ ) −1
𝑚
r = 0.05 Solution: 𝐹 = 𝑅[ 𝑟 ]
𝑚
m =2 0.05 20
(1+ ) −1
n = (2)(10)=20 𝐹 = 18000[ 2
0.05 ]
2
0.6386164403
𝐹 = 18000[ 0.025
]

𝐹 = ₱459, 803.84
𝑝
6-10) Given: F = 1 000 000 𝐹 [(1+𝑟/𝑚) 𝑐 −1]
r = 0.06 Solution: 𝑅 = (1+𝑟/𝑚)𝑛−1
m =1 6
1000000 [(1+0.06/1)12 −1]
n = (1)(12)=12 𝑅 = (1+0.06/1)12 −1
p =6
29563.0141
c = 12 𝑅 = 1.012196472
𝑅 = ₱29, 206.79425

DEFERRED ANNUITY

11-15) Given: −(1+𝑖)−(𝑛+𝑑) +(1+𝑖)−𝑑

Solution: 𝑃 = 𝑅[ ]𝑃 =
R = 30,000 𝑖
r = 0.04 −(1.02)−(6+5)+(1.02)−5
30000 [ ]
t=3 0.02
0.10146777074
m=2 𝑃 = 30000 ( )
0.02
d=5 𝑃 = 30000(5.07338853683)
i = r/m = 0.04/2 = 0.02 P = ₱152,201.66
n = (m)(t) = (2)(3) = 6
Thus, the present value of the savings is ₱ 152,201.66.

16-20) Given: −(1+𝑖)−(𝑛+𝑑) +(1+𝑖)−𝑑

Solution: 𝑃 = 𝑅[ ]
R = 1,500 𝑖
−(18+2)
r = 0.12 −(1.01 ) + (1.01)−2
t = 18 mos = 1.5 yrs 𝑃 = 1500 [ ]
0.01
m = 12 0.16075157907
d=2 𝑃 = 1500 ( 0.01
)
i = r/m = 0.12/12 = 0.01 𝑃 = 1500(16.07515790696)
n = (m)(t) = (12)(1.5) = 18 P = ₱24,112.74
Thus, the cellphone is worth ₱24,112.74.

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga