Unit 13: Simple and General Annuities • Grade 11

Lesson 2
General Annuity

Table of Contents

Learning Competencies 2
Learning Objectives 2
Suggested Time Frame 2
Essential Questions 3
Prerequisite Skills and Topics 3
Lesson Proper 4
- A. Introduction 4
- B. Discussion 7
- C. Practice and Feedback 17
Performance Assessment 28
Synthesis 36
Bibliography 36

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 Unit 13: Simple and General Annuities • Grade 11

Unit 13 | Simple and General Annuities

Lesson 2: General Annuity

Learning Competencies

The learner
• distinguishes between simple and general annuities [M11GM-IIc-2]; and
• finds the future value and present value of both simple annuities and general
annuities. [M11GM-IIc-d-1]

Learning Objectives

At the end of this lesson, the learner should be able to

• accurately differentiate a general annuity from a simple annuity;
• correctly determine if a real-life situation illustrates the future value or the present
value of a general annuity;
• correctly determine if a real-life situation illustrates an ordinary general annuity or a
general annuity due; and
• correctly solve for the future value or the present value of a general annuity.

Suggested Time Frame

3 hours and 20 minutes1

1
Suggested time frame is based on the DepEd calendar for A.Y. 2018-2019 and the curriculum guide for mathematics (August
2016 version).

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 Unit 13: Simple and General Annuities • Grade 11

Essential Questions

At the end of this lesson, the student should be able to answer the following questions:
• What is a general annuity?
• How will you know if the situation illustrates a future value or a present value of a
general annuity?
• How will you know if the situation illustrates an ordinary general annuity or a
general annuity due?
• How will you solve for the future value or the present value of a general annuity?

Prerequisite Skills and Topics

Skills:
• Changing percent to decimal
• Evaluating rational exponents
• Solving problems involving simple interest
• Solving problems involving compound interest
• Solving problems involving simple annuity

Topics:
• Math 5 Unit 13: Percent | Lesson 1: Percent
• Math 9 Unit 5: Rational Exponents and Radical Expressions | Lesson 2: Writing
Expressions with Rational Exponents as Radical Expressions
• General Mathematics Unit 12: Simple and Compound Interest | Lesson 2: Solving
Problems Involving Simple Interest
• General Mathematics Unit 12: Simple and Compound Interest | Lesson 4: Solving
Problems Involving Compound Interest
• General Mathematics Unit 13: Simple and General Annuities | Lesson 1: Simple
Annuity

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 Unit 13: Simple and General Annuities • Grade 11

Lesson Proper

A. Introduction

Suggested Warm-up Activities

Choose from any of the following warm-up activities. These warm-up activities should
either stimulate recall of previous lesson or introduce the lesson and not already used
in the study guide.

Activity 1: Duration: 10 minutes

Present or Future?
Materials Needed: cardboard, marker

This activity will review the Methodology:

students in determining the 1. Ask the students to prepare two strips of
necessary concepts in an cardboard. On the first cardboard, write down
annuity. “Present Value” and on the second cardboard,
write “Future Value”.
2. Ask the students the following questions about
annuities. Let them identify if the following
situations are looking for the present value or the
future value of the annuity.
• Marco deposits ₱1 000 at the end of every two
months in an account paying 3% interest
compounded quarterly. What is the amount in
the account after 5 years?
• Jack purchased a cellphone via installment
payment that charges 3% interest
compounded monthly. He agreed to pay
₱3 000 at the beginning of every three months
for two years. What is the cash price of the
cellphone?

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 Unit 13: Simple and General Annuities • Grade 11

3. After each question, ask a student to explain why

the situation illustrates a future value or a present
value of an annuity.

Expected Results:
• Future value
• Present value

Guide Questions:
1. How do you distinguish the present value from the
future value of an annuity?
2. Why is it important to determine if a problem
illustrates a future value or a present value?

Activity 2: Duration: 10 minutes

Guess the Code!
Materials Needed: pen, paper, calculator

This activity will intuitively Methodology:

introduce the concept of the 1. Divide the class into groups with four members
general annuity. each.
2. Ask them to form a line.
3. Present the following word problems to the class.
• Melissa bought a new cellular phone for a
series of quarterly payment of ₱800 for two
years. What is the cash price of the cellular
phone if the money is worth 9% compounded
bimonthly?
• How much must Michael set aside every four
months in 2 years for a trip abroad projected
to be worth ₱120 000 with an interest rate of
8% compounded semiannually?
• Find the amount of Greg’s debt if he agrees to
pay ₱25 000 every two months for 3 years with
an interest of 7% compounded quarterly.

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 Unit 13: Simple and General Annuities • Grade 11

4. Each member will have an assigned digit to

answer. Each must figure out the code.
1st student The first digit is the interest rate.
2nd student The second digit is the number of
compounding periods in a year.
3rd student The third digit is the number of
payment periods in a year.
4th student The last digit is the term of the
annuity.

5. The students should write their answer on a piece

of paper.
6. The first group to correctly get the code gets one
point.
7. The group with the most points wins.

Expected Results:
The following are the code of the given problems.
• 9−6−4−2
• 8−2−3−2
• 7−4−6−3

Guide Questions:
1. How did you identify the given values in the
annuity problems?
2. Are the information taken by each of the member
of the group helpful in solving the future or
present value of the annuity?

Teacher’s Notes
A suggested warm-up activity with ICT integration is available in the presentation file
that you can download through this link: http://bit.ly/2JLzHvY

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 Unit 13: Simple and General Annuities • Grade 11
B. Discussion

Teacher’s Notes
An alternative way of presenting the following discussion is through the video lecture
included in your Quipper Video subscription package. Just log in to your teacher
account at http://link.quipper.com/ and assign your students the corresponding video
lecture which they can watch either at home or in the classroom.

Suggested Instructional Flow

1. Define and Discover

In this lesson, the following key terms and concepts will be discussed:

• General Annuity – it is an annuity certain whose compounding period is not

the same as the payment interval.

Example:
Sheldon buys a brand-new TV with installment payment at the end of each
quarter with interest compounded annually.

• Solving for the Future Value and Present Value of a General Annuity

1. Identify the given information from the problem.

We need to identify the following values.

𝑅 = regular or periodic payment,

𝑝 = number of regular or periodic payments per year,
𝑟
𝑖 = periodic rate, given by 𝑖 = 𝑚, where 𝑟 is the interest rate and 𝑚 is the
number of compounding periods within a year, and
𝑛 = total number of payments, given by 𝑛 = 𝑡 ∙ 𝑝, where 𝑡 is the length of the
term in years, and 𝑝 is the number of payments per year.

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 Unit 13: Simple and General Annuities • Grade 11
2. Solve for 𝑐.

We introduce another value 𝑐, which is equal to the number of compounding

periods over the number of payments per year. This process transforms the
compounding period to the payment period. It is given by

𝑚
𝑐=
𝑝

where 𝑚 is the number of compounding periods, and 𝑝 is the number of

payments per year.

3. Solve for 𝑖2 .

This is the periodic interest rate per payment period. It is given by

𝑖2 = (1 + 𝑖)𝑐 − 1

4. Compute for the Future Value or Present Value.

The following formulas are used in finding the future value and present value
of an ordinary general annuity.

Future Value of an Ordinary Present Value of an Ordinary

General Annuity General Annuity

(1 + 𝑖2 )𝑛 − 1 1 − (1 + 𝑖2 )−𝑛
𝐹𝑉𝑂𝐺𝐴 = 𝑅[ ] 𝑃𝑉𝑂𝐺𝐴 = 𝑅[ ]
𝑖2 𝑖2

The following formulas are used in finding the future value and present value
of a general annuity due.

Future Value of a General Present Value of a General

Annuity Due Annuity Due

(1 + 𝑖2 )𝑛+1 − 1 1 − (1 + 𝑖2 )1−𝑛
𝐹𝑉𝐺𝐴𝐷 = 𝑅 [ − 1] 𝑃𝑉𝐺𝐴𝐷 = 𝑅 [ + 1]
𝑖2 𝑖2

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 Unit 13: Simple and General Annuities • Grade 11
Example:
Joanne deposited ₱1 000 every end of the month in a savings account at 3%
interest compounded quarterly. How much will her money be after five
years?

In this case, we have the following given information.

• The regular payment is ₱1 000.

• The number of regular payments within a year is 12 since Joanne
deposits ₱1 000 every end of the month.
• The number of compounding periods is 4, and the interest rate is 3%.
𝑟 0.03
• The periodic interest is 𝑖 = 𝑚 = 4
= 0.0075.
• The total number of payments is 𝑛 = 𝑡 ∙ 𝑝 = 5 ∙ 12 = 60.
• The value of 𝑐 is

𝑚 4 1
𝑐= = = ≈ 0.3333
𝑝 12 3

• The value of 𝑖2 is

1
𝑖2 = (1 + 0.0075)3 −1 ≈ 0.002493776

• The future value of the ordinary general annuity is computed as

follows.

(1 + 𝑖2 )𝑛 − 1
𝐹𝑉𝑂𝐺𝐴 = 𝑅 [ ]
𝑖2
(1 + 0.002493776)60 − 1
𝐹𝑉𝑂𝐺𝐴 = 1 000 [ ]
0.002493776
𝐹𝑉𝑂𝐺𝐴 = 64 634.57

Thus, her money will grow to ₱64 634.57 after 5 years.

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 Unit 13: Simple and General Annuities • Grade 11

2. Develop and Demonstrate

The following examples may be used in the discussion.

Teacher’s Notes
Use the Try It! slides of the corresponding presentation file to present the worked
examples. You may also refer to the worked examples provided in the study guide
for varieties.

Example 1: Marco deposits ₱1 000 at the end of every two months in

an account paying 3% compounded quarterly. What will
be the amount in his account after 5 years?

Solution/Explanation: 1. Identify the given information from the problem.

The regular payment is 𝑅 = 1 000.

The interest rate is 3% or 𝑟 = 0.03. The number of

compounding periods within a year is 𝑚 = 4 since
compounding is done quarterly.
𝑟 0.03
Thus, the periodic rate is 𝑖 = 𝑚 = 4
= 0.0075.

The length of the term is 5 years or 𝑡 = 5. The

payment is made at the end of every two months
or 𝑝 = 6.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 5 ⋅ 6 = 30.

2. Solve for 𝑐.

𝑚 4 2
𝑐= = =
𝑝 6 3

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 Unit 13: Simple and General Annuities • Grade 11

3. Solve for 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
2
𝑖2 = (1 + 0.0075)3 − 1
2
𝑖2 = (1.0075)3 − 1
𝑖2 = 1.004993770743 −1
𝑖2 = 0.004993770743

4. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the future value of the

annuity since we would like to know the value
after 5 years. Moreover, it is an ordinary general
annuity since the payment is made at the end of
every two months.

5. Solve for the future value of the ordinary annuity.

(1 + 𝑖2 )𝑛 − 1
𝐹𝑉OGA = 𝑅 [ ]
𝑖2
(1 + 0.004993770743)30 − 1
𝐹𝑉OGA = 1 000 [ ]
0.004993770743
(1.004993770743)30 − 1
𝐹𝑉OGA = 1 000 [ ]
0.004993770743
𝐹𝑉OGA = 32 277.04

Thus, Marco will have ₱𝟑𝟐 𝟐𝟕𝟕. 𝟎𝟒 on his account at the

end of 5 years.

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 Unit 13: Simple and General Annuities • Grade 11

Example 2: Jack purchased a cellphone via installment payment that

charges 3% interest compounded monthly. He agreed to
pay ₱3 000 at the beginning of every three months for
two years. What is the cash price of the cellphone?

Solution/Explanation: 1. Identify the given information from the problem.

The regular payment is 𝑅 = 3 000.

The interest rate is 3% or 𝑟 = 0.03. The number of

compounding periods within a year is 𝑚 = 12 since
compounding is done monthly.
𝑟 0.03
Thus, the periodic rate is 𝑖 = 𝑚 = 12
= 0.0025.

The length of the term is 2 years or 𝑡 = 2. The

payment is made quarterly or 𝑝 = 4.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 2 ⋅ 4 = 8.

2. Solve for 𝑐.

𝑚 12
𝑐= = =3
𝑝 4

3. Solve for 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
𝑖2 = (1 + 0.0025)3 − 1
𝑖2 = (1.0025)3 − 1
𝑖2 = 0.007518765625

4. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the present value of the

annuity since we would like to know the present

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 Unit 13: Simple and General Annuities • Grade 11

cash price of the phone. Moreover, it is a general

annuity due since the payment is made at the
beginning of every three months.

5. Solve for the present value of the annuity due.

1 − (1 + 𝑖2 )1−𝑛
𝑃𝑉GAD = 𝑅 [ + 1]
𝑖2
1 − (1 + 0.007518765625)1−8
𝑃𝑉GAD = 3 000 [ + 1]
0.007518765625
1 − (1.007518765625)−7
𝑃𝑉GAD = 3 000 [ + 1]
0.007518765625
𝑃𝑉GAD = 23 382.41

Thus, the cash price of the cellphone is ₱𝟐𝟑 𝟑𝟖𝟐. 𝟒𝟏.

Example 3: Ms. Cruz plans to start an investment fund. There are two
options. In Option A, she is required to pay ₱3 000 at the
end of every two months and earns 3% interest
compounded monthly. In Option B, she is required to pay
₱1 500 at the end of every month and earns 2% interest
compounded quarterly. Which of these options will give a
higher amount after ten years?

Solution/Explanation: 1. Solve for the value of the money under Option A.

First, let us determine the given values under

Option A.

The regular payment is 𝑅 = 3 000.

The interest rate is 3% or 𝑟 = 0.03. The number of

compounding periods within a year is 𝑚 = 12 since
compounding is done monthly.
𝑟 0.03
Thus, the periodic rate is 𝑖 = 𝑚 = 12
= 0.0025.

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 Unit 13: Simple and General Annuities • Grade 11

The length of the term is 10 years or 𝑡 = 10.

The payment is made every two months or 𝑝 = 6.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 10 ⋅ 6 = 60.

Using the information here, let us solve for the

value of 𝑐.

𝑚 12
𝑐= = =2
𝑝 6

After this, let us solve for the value of 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
𝑖2 = (1 + 0.0025)2 − 1
𝑖2 = (1.0025)2 − 1
𝑖2 = 0.00500625

Next, let us determine the kind of annuity under

Option A.

We know that it illustrates the future value of the

annuity since we are looking for the value of the
money ten years from now. Moreover, it is an
ordinary general annuity since the payment is
made at the end of every two months.

Using the formula for the future value of an

ordinary general annuity, let us determine the
amount of the investment after 10 years.

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 Unit 13: Simple and General Annuities • Grade 11

(1 + 𝑖2 )𝑛 − 1
𝐹𝑉OGA = 𝑅 [ ]
𝑖2
(1 + 0.00500625)60 − 1
𝐹𝑉OGA = 3 000 [ ]
0.00500625
(1.00500625)60 − 1
𝐹𝑉OGA = 3 000 [ ]
0.00500625
𝐹𝑉OGA = 209 350.44

Thus, she will have ₱𝟐𝟎𝟗 𝟑𝟓𝟎. 𝟒𝟒 after ten years.

2. Solve for the value of the money under Option B.

This time, let us determine the given values under

Option B.

The regular payment is 𝑅 = 1 500.

The interest rate is 2% or 𝑟 = 0.02. The number of

compounding periods within a year is 𝑚 = 4 since
compounding is done quarterly.
𝑟 0.02
Thus, the periodic rate is 𝑖 = = = 0.005.
𝑚 4
The length of the term is 10 years or 𝑡 = 10.
The payment is done monthly or 𝑝 = 12.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 10 ⋅ 12 = 120.

Using the information here, let us solve for the

value of 𝑐.

𝑚 4 1
𝑐= = =
𝑝 12 3

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 Unit 13: Simple and General Annuities • Grade 11

After this, let us solve for the value of 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
1
𝑖2 = (1 + 0.005)3 − 1
1
𝑖2 = (1.005)3 − 1
𝑖2 = 0.001663896579

Next, let us determine the kind of annuity under

Option B.

We know that it illustrates the future value of the

annuity since we are looking for the value of the
money ten years from now. Moreover, it is an
ordinary general annuity since the payment is
made at the end of every month.

Using the formula for the future value of an

ordinary general annuity, let us determine the
amount of the investment after 10 years.

(1 + 𝑖2 )𝑛 − 1
𝐹𝑉OGA = 𝑅 [ ]
𝑖2
(1 + 0.001663896579)120 − 1
𝐹𝑉OGA = 1 500 [ ]
0.001663896579
(1.001663896579)120 − 1
𝐹𝑉OGA = 1 500 [ ]
0.001663896579
𝐹𝑉OGA = 199 045.64

In Option B, she will have ₱𝟏𝟗𝟗 𝟎𝟒𝟓. 𝟔𝟒 at the end

of 10 years.

Therefore, she must choose Option A since it gives a

higher value at the end of ten years.

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 Unit 13: Simple and General Annuities • Grade 11
C. Practice and Feedback

Teacher’s Notes
Use the Let’s Practice! slides of the corresponding presentation file to present the
questions for practice. You may also refer to the Try It Yourself! questions provided in
the study guide for varieties.

For individual practice

1. Ask the students to answer the following problem items individually using pen and
paper.
2. Give students enough time to answer the problem items.
3. Call a random student to show his or her work on the board afterward.
4. Let the student share how he or she comes up with his or her solution.
5. Inform the student the accuracy of his answer and solution, and in the case when
there is some sort of misconception, lead the student to the right direction to find
the correct answer.

Problem 1: John deposits ₱5 000 at the end of every three months in an

account paying 2% compounded semiannually. What will be
the amount in his account after 8 years?

Solution/Explanation: 1. Identify the given information from the problem.

The regular payment is 𝑅 = 5 000.

The interest rate is 2% or 𝑟 = 0.02. The number of

compounding periods within a year is 𝑚 = 2 since
compounding is done semiannually.
𝑟 0.02
Thus, the periodic rate is 𝑖 = 𝑚 = 2
= 0.01.

The length of the term is 2 years or 𝑡 = 8. The

payment is made quarterly or 𝑝 = 4.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 8 ⋅ 4 = 32.

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 Unit 13: Simple and General Annuities • Grade 11

2. Solve for 𝑐.

𝑚 2 1
𝑐= = =
𝑝 4 2

3. Solve for 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
1
𝑖2 = (1 + 0.01)2 − 1
1
𝑖2 = (1.01)2 − 1
𝑖2 = 0.004987562112

4. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the future value of the annuity

since we would like to know the amount of money
after 8 years. Moreover, it is an ordinary general
annuity since the payment is made at the end of every
three months.

5. Solve for the future value of the ordinary annuity.

(1 + 𝑖2 )𝑛 − 1
𝐹𝑉OGA = 𝑅 [ ]
𝑖2
(1 + 0.004987562112)32 − 1
𝐹𝑉OGA = 5 000 [ ]
0.0049875621121
(1.0049875621121)32 − 1
𝐹𝑉OGA = 5 000 [ ]
0.004987562112
𝐹𝑉OGA = 173 009.02

Thus, John will have ₱𝟏𝟕𝟑 𝟎𝟎𝟗. 𝟎𝟐 on his account after 8

years.

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 Unit 13: Simple and General Annuities • Grade 11

Problem 2: Mr. Dela Cruz plans to invest money for 15 years. He pays
₱2 500 at the end of every month. The plan earns 3% interest
rate compounded semiannually. How much will the money
be after 15 years?

Solution/Explanation: 1. Identify the given information from the problem.

The regular payment is 𝑅 = 2 500.

The interest rate is 3% or 𝑟 = 0.03. The number of

compounding periods within a year is 𝑚 = 2 since
compounding is done semiannually.
𝑟 0.03
Thus, the periodic rate is 𝑖 = 𝑚 = 2
= 0.015.

The length of the term is 15 years or 𝑡 = 15. The

payment is made at the end of every month or 𝑝 = 12.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 15 ⋅ 12 = 180.

2. Solve for 𝑐.

𝑚 2 1
𝑐= = =
𝑝 12 6

3. Solve for 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
1
𝑖2 = (1 + 0.015)6 − 1
1
𝑖2 = (1.015)6 − 1
𝑖2 = 0.002484516725

4. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the future value of the annuity

since we would like to know the value after 15 years.

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 Unit 13: Simple and General Annuities • Grade 11

Moreover, it is an ordinary general annuity since the

payment is made at the end of every month.

5. Solve for the future value of the ordinary annuity.

(1 + 𝑖2 )𝑛 − 1
𝐹𝑉OGA = 𝑅 [ ]
𝑖2
(1 + 0.002484516725)180 − 1
𝐹𝑉OGA = 2 500 [ ]
0.002484516725
(1.002484516725)180 − 1
𝐹𝑉OGA = 2 500 [ ]
0.002484516725
𝐹𝑉OGA = 566 589.28

Thus, the money will be ₱𝟓𝟔𝟔 𝟓𝟖𝟗. 𝟐𝟖 after 15 years.

Problem 3: Allison wants to buy a new car worth ₱900 000 via
installment. How much should be the regular payments at
the end of every month for five years if the money is
compounded by 5% quarterly?

Solution/Explanation: 1. Identify the given information from the problem.

The present value of the car is 𝑃𝑉𝑂𝐺𝐴 = 900 000.

The interest rate is 5% or 𝑟 = 0.05. The number of

compounding periods within a year is 𝑚 = 4 since
compounding is done quarterly.
𝑟 0.05
Thus, the periodic rate is 𝑖 = = = 0.0125.
𝑚 4

The length of the term is 5 years or 𝑡 = 5. The

payment is made at the end of every month or 𝑝 = 12.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 5 ⋅ 12 = 60.

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 Unit 13: Simple and General Annuities • Grade 11

2. Solve for 𝑐.

𝑚 4 1
𝑐= = =
𝑝 12 3

3. Solve for 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
1
𝑖2 = (1 + 0.0125)3 − 1
1
𝑖2 = (1.0125)3 − 1
𝑖2 = 0.004149425123

4. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the present value of the

annuity since we are given the present value of the
car, which is ₱900 000. Moreover, it is an ordinary
general annuity since the payment is made at the end
of the month.

5. Solve for the regular payments of the ordinary

annuity.

1 − (1 + 𝑖2 )−𝑛
𝑃𝑉OGA = 𝑅 [ ]
𝑖2
1 − (1 + 0.004149425123)−60
900 000 = 𝑅 [ ]
0.004149425123
900 000 = 𝑅[53.01733256]
900 000
=R
53.01733256
𝑅 = 16 975.58

Therefore, Allison must pay ₱𝟏𝟔 𝟗𝟕𝟓. 𝟓𝟖 at the end of every

month for five years.

21
 Unit 13: Simple and General Annuities • Grade 11
For group practice
1. Ask the students to form a minimum of 2 groups to a maximum of 5 groups.
2. Each group will answer problem items 4 and 5. These questions are meant to test
students’ higher-order thinking skills by working collaboratively with their peers.
3. Give students enough time to analyze the problem and work on their solution.
4. Ask each group to assign a representative to show their solution on the board and
discuss as a group how they come up with their solution.
5. Inform the student the accuracy of his answer and solution, and in the case when
there is some sort of misconception, give the student opportunity to work with
his/her peers to re-analyze the problem, and then lead them to the right direction to
find the correct answer.

Problem 4: Mrs. Lacerna bought a house that costs ₱1 200 000 for a 10%
down payment. The remaining balance will be paid via
installment at the end of every three months for 7 years and
charges 6% interest compounded semiannually. What must
be her monthly payment?

Solution/Explanation: 1. Identify the given information from the problem.

The present value of the car is 𝑃𝑉𝑂𝐺𝐴 = 1 200 000.

The down payment is 10% of ₱1 200 000, which is
₱120 000.

The interest rate is 6% or 𝑟 = 0.06. The number of

compounding periods within a year is 𝑚 = 2 since
compounding is done semiannually.
𝑟 0.06
Thus, the periodic rate is 𝑖 = = = 0.03.
𝑚 2

The length of the term is 7 years or 𝑡 = 7. The

payment is made at the end of every three months or
𝑝 = 4.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 7 ⋅ 4 = 28.

22
 Unit 13: Simple and General Annuities • Grade 11

2. Solve for 𝑐.

𝑚 2 1
𝑐= = =
𝑝 4 2

3. Solve for 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
1
𝑖2 = (1 + 0.03)2 − 1
𝑖2 = 0.01488915651

4. Determine the kind of annuity illustrated in the

problem.

The situation illustrates the present value of the

annuity since we are given the present value of the
house, which is ₱1 200 000. However, we will subtract
this value by ₱120 000 since it has already been paid
as a down payment. As such, the present value is
₱1 080 000. Moreover, it is an ordinary general
annuity since the payment is made at the end of every
three months.

5. Solve for the regular payments of the ordinary

annuity.

1 − (1 + 𝑖2 )−𝑛
𝑃𝑉OGA = 𝑅 [ ]
𝑖2
1 − (1 + 0.01488915651)−28
1 080 000 = 𝑅 [ ]
0.01488915651
1 080 000 = 𝑅[22.76033528]
1 080 000
=𝑅
22.76033528
𝑅 = 47 450.97

Thus, Mrs. Lacerna must pay ₱𝟒𝟕 𝟒𝟓𝟎. 𝟗𝟕 every end of three
months for seven years.

23
 Unit 13: Simple and General Annuities • Grade 11

Problem 5: Mrs. Mendoza wants to start a retirement plan. Two

companies offer different policies. In Company A, she should
deposit ₱2 000 at the beginning of every month. Her account
will earn 2.8% interest compounded quarterly. In Company B,
she should deposit ₱6 000 at the end of every three months.
Her account will earn 3.6% interest compounded annually.
Both policies are payable for 20 years. Which of these policies
should she choose?

Solution/Explanation: 1. Solve for the value of the money under Company A.

First, let us determine the given values under Option

A.

The regular payment is 𝑅 = 2 000.

The interest rate is 2.8% or 𝑟 = 0.028. The number of

compounding periods within a year is 𝑚 = 4 since
compounding is done quarterly.
𝑟 0.028
Thus, the periodic rate is 𝑖 = = = 0.007.
𝑚 4

The length of the term is 20 years or 𝑡 = 20.

The payment is made monthly or 𝑝 = 12.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 20 ⋅ 12 = 240.

Using the information here, let us solve for the value

of 𝑐.

𝑚 4 1
𝑐= = =
𝑝 12 3

24
 Unit 13: Simple and General Annuities • Grade 11

After this, let us solve for the value of 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
1
𝑖2 = (1 + 0.007)3 − 1
1
𝑖2 = (1.007)3 − 1
𝑖2 = 0.002327909963

Next, let us determine the kind of annuity under

Option A.

We know that it illustrates the future value of the

annuity since we are looking for the value of the
money ten years from now. Moreover, it is a general
annuity due since the payment is made at the
beginning of every month.

Using the formula for the future value of a general

ordinary annuity, let us determine the amount of the
investment after 20 years.

(1 + 𝑖2 )𝑛+1 − 1
𝐹𝑉GAD = 𝑅1 [ − 1]
𝑖2
(1 + 0.002327909963)240+1 − 1
𝐹𝑉GAD = 2 000 [ − 1]
0.002327909963
𝐹𝑉GAD = 643 495.67

In Company A, she will earn ₱643 495.67 after 20

years.

2. Solve for the value of the money under Company B.

This time, let us determine the given values under

Company B.

The regular payment is 𝑅 = 6 000.

25
 Unit 13: Simple and General Annuities • Grade 11

The interest rate is 3.6% or 𝑟 = 0.036. The number of

compounding periods within a year is 𝑚 = 1 since
compounding is done annually.
𝑟 0.036
Thus, the periodic rate is 𝑖 = 𝑚 = 1
= 0.036.
The length of the term is 20 years or 𝑡 = 20.
The payment is made quarterly or 𝑝 = 4.
Thus, the total number of payments is
𝑛 = 𝑡 ⋅ 𝑝 = 20 ⋅ 4 = 80.

Using the information here, let us solve for the value

of 𝑐.

𝑚 1
𝑐= =
𝑝 4

After this, let us solve for the value of 𝑖2 .

𝑖2 = (1 + 𝑖)𝑐 − 1
1
𝑖2 = (1 + 0.036)4 − 1
1
𝑖2 = (1.036)4 − 1
𝑖2 = 0.008880990008

Next, let us determine the kind of annuity under

Company B.

We know that it illustrates the future value of the

annuity since we are looking for the value of the
money ten years from now. Moreover, it is an
ordinary general annuity since the payment is made
at the end of every three months.

Using the formula for the future value of a general

ordinary annuity, let us determine the amount of the
investment after 20 years.

26
 Unit 13: Simple and General Annuities • Grade 11

(1 + 𝑖2 )𝑛 − 1
𝐹𝑉OGA = 𝑅2 [ ]
𝑖2
(1 + 0.008880990008)80 − 1
𝐹𝑉OGA = 6 000 [ ]
0.008880990008
(1.008880990008)80 − 1
𝐹𝑉OGA = 6 000 [ ]
0.008880990008
𝐹𝑉OGA = 694 918.38

In Company B, she will earn ₱694 918.38 after 20

years.

Therefore, Mrs. Mendoza must choose Company B since it

gives a higher value at the end of twenty years.

Web Box

For more discussion and examples about general annuity, visit the following web
page:

• Dunn, John. “Lesson 5: General Annuities and Equivalent Rates.” Max’s Online
Math. Retrieved 29 April 2019 from https://bit.ly/2DCkRUQ

To easily evaluate the future value or present value of simple annuities, you may use
the following online calculators:

• Furey, Edward. “Future Value of Annuity Calculator.” Calculator Soup. Retrieved

15 May 2019 from http://bit.ly/2WLr7B5

• Furey, Edward. “Present Value of Annuity Calculator.” Calculator Soup.

Retrieved 15 May 2019 from http://bit.ly/2WLrb3N

27
 Unit 13: Simple and General Annuities • Grade 11

Performance Assessment

This performance assessment serves as formative assessment, divided into three sets
based on student’s level of learning. See next pages for separate printable worksheets.
• Worksheet I (for beginners)
• Worksheet II (for average learners)
• Worksheet III (for advanced learners)

Teacher’s Notes
For a standard performance assessment regardless of the student’s level of learning,
you may give the problem items provided in the Check Your Understanding section of
the study guide.

28
 Unit 13: Simple and General Annuities • Grade 11
Worksheet I

Analyze the following problems and solve for what is asked. Show your complete solution.
(20 points)

1. Find the present value of a general annuity due with a semiannual deposit is ₱6 000,
has an interest of 5% compounded annually, and due after 5 years.

2. Find the future value of a series of periodic payments of ₱1 500 made at the beginning
of every month for 4 years if the money is compounded by 6% quarterly.

3. How much should be invested at the end of every three months at 4% compounded
semiannually to accumulate ₱50 000 after 5 years?

29
 Unit 13: Simple and General Annuities • Grade 11
4. Anna purchased a TV worth ₱60 000 with a 5% discount. She agreed to pay it via
installment at the end of every month for two years. The payment scheme charges 5%
interest compounded bimonthly. How much is his monthly payment?

5. Mr. Mariano plans to open an investment account. There are two banks he is
considering. In Bank A, he should deposit ₱4 000 at the end of every month, and it
earns 3.7% interest compounded quarterly. In Bank B, he should deposit ₱12 000 at the
end of every three months, and it also earns 3.7% interest compounded monthly.
Which of the two options will accumulate more money after 10 years?

30
 Unit 13: Simple and General Annuities • Grade 11
Worksheet II

Analyze the following problems and solve for what is asked. Show your complete solution.
(20 points)

1. Find the present value of an ordinary general annuity with a quarterly deposit is
₱10 000, has an interest of 4% compounded semiannually, and due after 5.5 years.

2. Find the accumulated value of a series of periodic payments of ₱4 000 made at the
beginning of every two months for 10 years if the money is compounded by 6%
monthly.

3. How much should be invested at the end of every six months at 5% compounded
annually to accumulate ₱30 000 after 5 years?

31
 Unit 13: Simple and General Annuities • Grade 11
4. Jimmy buys a car for ₱900 000. He pays a down payment of ₱80 000 and agrees that the
balance will be paid within 5 years. If the payments are to be made at the end of each
month and the interest is 12% compounded quarterly, how much is each payment?

5. Mr. Mendoza plans to open an investment account. There are two banks he is
considering. In Bank A, he should deposit ₱6 000 at the end of every two months, and it
earns 3.5% interest compounded monthly. In Bank B, he should deposit ₱3 000 at the
end of every month, and it earns 4% interest compounded bimonthly. Which of the two
options will accumulate more money after 10 years?

32
 Unit 13: Simple and General Annuities • Grade 11
Worksheet III

Analyze the following problems and solve for what is asked. Show your complete solution.
(20 points)

1. Find the present value of a series of periodic payments of ₱1 000 made at the beginning
of every three months for 13 years and nine months if the money is compounded by
4% bimonthly.

2. How much should be invested at the end of every three months at 3% compounded
semiannually to accumulate ₱80 000 after five years and six months?

3. Mr. Mendoza plans to open an account for his son’s education. There are two options.
In Option A, he should deposit ₱4 500 at the end of every three months, and it earns 4%
interest compounded quarterly. In Bank B, he should deposit ₱1 500 at the end of every
month, and it also earns 4% interest compounded quarterly. Which of the two options
will accumulate more money after 12 years?

33
 Unit 13: Simple and General Annuities • Grade 11
4. Mrs. Aleta bought a house that costs ₱3 000 000 with a 10% down payment. The
remaining balance will be paid via installment every end of the month for nine years,
and charges 5% interest compounded quarterly. What must be her monthly payment?

5. Mr. Aquino deposits ₱2 500 every end of the month to an account that earns 5%
compounded semiannually. How long will it take for his account to accumulate
₱179 433.13?

34
 Unit 13: Simple and General Annuities • Grade 11
Answer Key

Worksheet I

1. ₱53 894.06
2. ₱81 501.29
3. ₱2 271.86
4. ₱2 500.40
5. In Bank A, he would have ₱579 430.79. In Bank B, he would have ₱577 992.11. Bank A
will accumulate a higher future value.

Worksheet II
1. ₱196 710.80
2. ₱330 218.93
3. ₱2 681.51
4. ₱18 191.57
5. In Bank A, he would have ₱429 670.93. In Bank B, he would have ₱441 594.69. Mr.
Mendoza will earn more money in Bank B.

Worksheet III

1. ₱42 551.47
2. ₱3 359.20
3. In Option A, he will have ₱275 501.73. In Option B, he will have ₱276 418.04. Option B
will accumulate more money.
4. ₱31 069.70
5. Five years and three months.

35
 Unit 13: Simple and General Annuities • Grade 11

Synthesis

Wrap-up To summarize the lesson, ask students the following

questions:
1. How do you distinguish a simple annuity from a
general annuity?
2. How do you compute for the future value or the
present value of a general annuity?

Application and Values To integrate values and build connection to the real world,
Integration ask students the following questions:
1. What part of the lesson did you find hard to
comprehend?
2. How does knowing general annuities help in your
decision-making regarding finances?

Bridge to the Next Topic To spark interest for the next lesson, ask students the
following questions:
1. What comes to your mind when you hear the word
“fair”?
2. In your opinion, when do we say that a particular value
is fair to both buyer and seller?

Bibliography
Aduana, Nick L. Mathematics of Investment: Procedural Approach. Quezon City: C & E
Publishing, Inc., 2012.

Dunn, John. “Lesson 5: General Annuities and Equivalent Rates.” Max’s Online Math.
Retrieved 29 April 2019 from https://bit.ly/2DCkRUQ

Floes, Maricar, Ed. D, et al. Worktext in General Mathematics. Quezon City: C & E Publishing,
Inc. 2016

36