Question

How much must be deposited now, at 11% compounded annually, to yield an annuity payment of ₱150,000 at the end of each year, for 10 years.

Answer 1

Step 1:

Given data

r = 11%

Future amount A = 150,000

t = 10 years

Present amount p = ?

Step 2

$\begin{gathered} \text{A = P}(1+r)^t \\ 150000\text{ = p(1 + }0.11)^{10} \\ 150000\text{ = }p\text{ }\times1.11^{10} \\ 150000\text{ = 2.84P} \\ p\text{ = }\frac{150000}{2.84} \\ p\text{ = 52816.90} \end{gathered}$