# Annuity

**Situation**

An investment of P250,000 is made at the end of each year with interest of 2.5% compounded annually.

- Determine the equal-payment-series compound-amount factor after 10 years.
A. 11.203 C. 9.632 B. 10.578 D. 8.736 - Determine the total amount of the investment after 10 years.
A. P2,800,000.00 C. P2,400,000.00 B. P2,600,000.00 D. P2,200,000.00 - How long (in years) will it take for the investment to amount to P10,000,000.00?
A. 25 C. 15 B. 18 D. 28

**Problem**

\$180,000 was spent on the project that yields annual benefit of \$60,000 for a period of 8 years without any salvage value. Determine the benefit-to-cost ratio considering the cost of money to be 7%.

A. 1.99 | C. 1.57 |

B. 2.21 | D. 2.63 |

## Annuities and Capitalized Cost

**Annuity**

An annuity is a series of equal payments made at equal intervals of time. Financial activities like installment payments, monthly rentals, life-insurance premium, monthly retirement benefits, are familiar examples of annuity.

Annuity can be certain or uncertain. In *annuity certain*, the specific amount of payments are set to begin and end at a specific length of time. A good example of annuity certain is the monthly payments of a car loan where the amount and number of payments are known. In *annuity uncertain*, the annuitant may be paid according to certain event. Example of annuity uncertain is life and accident insurance. In this example, the start of payment is not known and the amount of payment is dependent to which event.