General Annuity–an annuity where the length of the payment interval is not the same as the length of the interest compounding period General Ordinary Annuity – a general annuity in which the periodic payment is made at the end of the payment interval EXAMPLES OF GENERAL ANNUITY:
• Monthly installment payment of a car, lot, or
house with an interest rate that is compounded annually. • Paying a debt semi-annually when the interest is compounded monthly. EXAMPLE 1
•Cris started to deposit ₱1,000 monthly
in a fund that pays 6% compounded quarterly. How much will be in the fund after 15 years? FUTURE VALUE OF A GENERAL ORDINARY ANNUITY 1+𝑗 𝑛 F=R 𝑗
Where R is the regular payment
j is the equivalent interest rate per payment interval converted from the interest rate per period. n is the number of payments EXAMPLE 2
•A teacher saves ₱5000 every 6 months
in a bank that pays 0.25% compounded monthly. How much will be her savings after 10 years? SEATWORK
•ABC Bank pays interest at the rate of 2%
compounded quarterly. How much will Ken have in the bank at the end of 5 years if he deposits ₱3,000 every month?