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An annuity due is an annuity whose

first payment occurs immediately, on a


day to be called the present. When we
refer to a sequence of payments as an
annuity due, we agree to think of each
payment as belonging to the following
payment interval, and to refer to the
payments as made at the beginnings of
payment intervals.
The term of an annuity due is defined as
the time from the beginning of the 1st
payment interval to the end of the last one.
Hence, the 1st payment occurs at the
beginning of the term, and it ends one
payment interval after the last payment.
The present value of an annuity due, or its
VALUE on the day of the 1st payment, is the
sum of the present values of the payments.
The amount of an annuity due, or its VALUE
at the end of the term, is the sum of the
accumulated values of the payments at
the end of the term.
R = periodic payment of the annuity due
n = total number of payments
i = interest per conversion period
FV or S = amount if an annuity due
PV or A = present value of an annuity
due
To find the present value:

PV or A = R + R ( )

To find the amount of an annuity due:

FV or S = R ( )-R
An investment of 5000.00 is made at the
beginning of each month for 8 years and
7 months. If interest is 12% compounded
monthly, how much will the investment
be worth at the end of the term?

Given:
R= 5,000.00 t=8.58 m= 12
r=0.12 n=103 i=0.01
Solution:

S=R( )-R
= 5000 ( ) - 5000
= 5000 ( ) - 5000
= 5000(181.4640117) 5000
= 907,320.0585 5000

S = 902,320.59
If money is worth 16% compounded
quarterly, find the present value and the
amount of annuity due of 1500.00
payable quarterly for 10 years.

Given:
R = 1500.00 m=4 r = .16
t= 10 years i = .04 n = 40
Solution:

A=R+R( )
A = 1500 + 1500 ( )
= 1500 + 1500 ( )
= 1500 + 1500 ( )
= 1500 + 1500 (19.58448484)
= 1500 + 29376.72726

A= 30876.73

S=R( )-R
= 1500 ( ) - 1500
= 1500 ( ) - 1500
= 1500 ( ) - 1500
= 1500 (99.82653633) - 1500

S=148,239.80
A house and lot is bought for 1,000,000.00
down payments and 5,000.00 payable at
the beginning of each month for 5 years.
What is the equivalent cash price of the
house and lot, if the interest rate is 12%
compounded monthly?

Given:
R = 5,000.00 i = .0125 t= 5 years

DP= 1,000,000.00 r = .15 m=1 n = 60


Solution:

A=R+R( )
= 5000 + 5000 ( )
=5000 + 5000 ( )
=5000 + 5000 ( )
=5000 + 5000 ( )
=5000 + 5000 (41.56002419)
=5000 + 207,800.12
= 212,800.12 + 1,000,00.00

Cash Equivalent = 1,212,800.12


1. Mr. Jason Pajarito agrees to pay 2000.00 at the beginning of
each 6 months for 5 years. If money is worth 12 %
compounded semi-annually, find the present value of his
debt.

2. Chelsea deposits 8,000.00 at the beginning of each month in


a fund that serves at 18% compounded monthly. How much
is in the fund at the end of 4years?

3. How much will Aubrela Galaunor accumulate in her insurance


policy by age of 60 if her first semi-annual contribution of
10,000.00 is made on her 28th birthday and the last made six
months before her birthday? Assume that her insurance
policy earns 11% compounded semi-annually.

4. Find the present value of an annuity due of 3,700.00 payable


monthly for 4 years if money is worth 6% compounded
monthly?
5. Christels Furniture is advertising a Lazy Boy Chair for 5,000.00
down monthly payments of 5,000.00 including interest at 18%
compounded monthly. What is the cash price of the chair?

6. Sans Rival Services acquired televisions under a capital base


agreement. Sans Rival Services pays the lesser 300,000.00 per
year at the beginning of each year at 10% compounded
annually. What is the long-term lease liability will Sans Rival
Services report in its financial statements?

7. Renmark pays 630.00 at the beginning of every 3 months for


8years at 7%. What will be the cash price of the cabinet
acquired by Renmark?

8. If money is worth 9% compounded semi-annually, find the


amount of an annuity due paying 935.00 for a term of 4 years.
1. Given:
R= 2,000.00 t = 5 years r = 0.125
m=2 i = .0625 n = 10

A =R+R( )
= 2,000 + 2,000 ( )
= 2,000 + 2,000 ( )
= 2,000 + 2,000 (6.728296515)
= 2,000 + 13456.59303

A= 15,456.59

2. Given:
R= 8,000.00 t = 4 years r = 18%
m = 12 i = .015 n = 48

S=R( )R
= 8,000.00 ( ) 8,000.00
= 8,000.00 ( ) 8,000.00
= 8,000.00 ( ) 8,000.00
= 8,000.00(71.60869758) - 8000.00
=572,869.58 - 8,000.00

S= 564,869.58
3. Given:
R= 10,000.00 t= 32 r = 11%
m=2 i = .055 n = 64

S=R( )R
= 10,000.00 ( ) 10,000.00
= 10,000.00 ( ) 10,000.00
= 10,000.00 ( ) 10,000.00
= 10,000.00 (572.0833916) 10,000.00
=5,720,833.92 10,000.00

S=5,710,833.92

4. Given:
R= 3,700.00 t = 4 years r = 6%
m = 12 i = .005 n = 48

A=R+R( )
= 3,700.00 + 3,700.00 ( )
= 3,700.00 + 3,700.00 ( )
= 3,700.00 +3,700.00 (41.79321937)
= 3,700.00 + 154,634.91

A= 158,334.91
5. Given:
R= 5,000.00 t=1 r = 18%
m = 12 i = .015 n = 12

A =R+R( )
= 5,000.00 + 5,000.00 ( )
= 5,000.00 + 5,000.00 ( )
= 5,000.00 + 5,000.00(10.07111778)
= 5,000.00 + 50,355.59

A= 55,355.59

6. Given:
R= 300,000.00 t=6 r = 10%
m=1 i = .10 n=6

A=R+R( )
= 300,000.00 + 300,000.00 ( )
= 300,000.00 + 300,000.00 ( )
= 300,000.00 + 300,000.00(0.379078676)
= 300,000.00 + 1,137,236.03

A= 1,437,236.03
7. Given:
R= 630.00 t = 8 years r = 7%
m=4 i = .0175 n = 32

A =R+R( )
= 630.00 + 630.00 ( )
= 630.00 + 630.00 ( )
= 630.00 + 630.00 (23.7698765)
= 630.00 + 14,975.0222

A= 15,605.02

8. Given:
R=935.00 t = 4 years r = 9%
m=2 i = .045 n=9

S=R( )R
= 935.00 ( ) 935.00
= 935.00 ( ) 935.00
= 935.00 (12.28820937) 935.00
= 11,489.47576 935.00

S=10,554.47576
Ara Kimberly Marcillan & Christine Angela Jhoy
Menor
1-BSCOA2