Professional Documents
Culture Documents
Annuity
r
Since i m , then to solve for the
nominal rate we have r i m .
Examples:
1. At what rate compounded monthly is
P3, 200 the present value of an
annuity of P200 paid at the end of
each month for 1 1 years?
2
2. Payments of P500 each are made every
year. At what rate compounded
annually will these payments amount to
P10, 000 in 13 years?
Example 3: An item can be purchased for
P45,000 cash or for P10,000 down payment
and a payment of P4,500 every six months for
6 years. Find the interest rate compounded
semi-annually.
Example 4: At the end of every three months,
Mr. Magaling puts P10,500 in an investment
house. If the account amounted to
P259,940.37 at the end of 5 years, at what
rate compounded quarterly was the interest
earned?
Additional Examples:
1. A loan of P8 838.51 is to be discharged by
making 15 semiannually payments of P940
each. At what rate compounded semiannually
is the interest charged on the loan?
2. Payments of P300 each made every year. At
what rate compounded annually will these
payments amount to
P8 336.42 in 22 years?