Question

GENERAL ANNUITY Instruction: Solve the given situations. Show your solutions (5 points each). 1. Soledad decides to save P2,700 at the end of every 6 months, which is the amount paid into her retirement plan by the company where she works. If she chooses an investment fund that guarantees 8% per year compounded quarterly, how much will she have in 10 years? 2. What is the present value of an annuity of P7,300 per semi-annual period for 7 years at an interest rate of 9% compounded annually? 3. Redentor has decided to make semi-annually payments of P7,800 at the end of every three months for 8 years into an investment that he thinks will yield 7% compounded semi-annually, what lump sump deposited today will result to the same future value? 4. Find the periodic payment of an annuity payable semi-annually for 12 years, whose present value is P87,200 with interest rate 14% compounded quarterly? 5. GMS Enterprise needs to accumulate P650,000 in 2 years to meet future needs. What regular payment would they need to make at the end of each quarter, at 12% interest compounded monthly?

Answer 1

1)

A/c balance after 10 years Px[(1+r)^n-1]=r Here, =((1+8%/4)^2-1)*2 A Interest rate per annum B Number of years C Number of payments per per annum A:C Interest rate per period (r) BxC Number of periods (n) Payment per period (P) 8.08% 10 2 4.04% 20 2,700 A/c balance after 10 years 5.32 2700x((1+4.04%)^20-1):4.04%

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