Question

Give the future and present value of an ordinary ordinary annuity given in the following conditions.

1. Monthly payments of P3,000 for 4 years with an interest rate of 3% compounded quarterly.

2. Quarterly payments of P5,000 for 10 years with an interest rate of 2% compounded annually.​

Answer 1

Answer:

1)

Use 10BA pro.

Input:

Display :end

(CLR TVM)

3 (I/YR)

12 (P/YR)

3000 (PV)

48 (N)

(PMT)

RESUL T- 66.40.

Report:

Loan amount: 3,000.00

Interest/year: 3.00%

Periodic payment: 66.40

Payment mode: End of period

Number of payments: 48.00

Total of all 48 payments: 3,187.35

Total interest paid: 187.35

Monthly payments is P 66.40

2)

Deposit per month = 5000. But since, the interest will be accrued quarterly, so, quarterly deposits will get interest. Quarterly deposit = 5000 * 3 = 15000

Quarterly rate of interest = 10/400 = 0.025

Total periods = 3 * 4 = 12

Applying formula for Future Value (FV)

= 15000 * [{(1+0.025)^12} —1] / 0.025

= P206933.29 Ans