Ordinary Annuity

​You are now 25 years old. For five (5) years, you have been working at Pacific Airlines. Recently, you are planning to live independently from your parents by the age of 30 years old. Your friend who is working at AMCI told you about a new condominium being developed in Mandaluyong City.  You have done your research on the developer and location, and you have decided that it is a good investment. You are targeting to buy a one (1) bedroom unit costing Php 6,255,000. You will need to pay a 30% down payment or Php 1,876,500 on the property in five (5) years. You are looking into various ordinary annuity policies that can help you cover the amount. 

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Options:

• Pro Life – 15% fixed annual interest; Php 125,000 semi-annual payment Php 1,768,385.94

• FVD Life – 10% fixed annual interest; Php 150,000 semi-annual payment Php 1,886,683.88

• ALA Philippines – 20% fixed annual interest; Php 100,000 semi-annual payment Php 1,593,742.46

Pro Life Computation

A = 125,000

R = 0.15

T = 5 years

M = 2

FVoa = 125,000 x [((1+0.15/2)^(2 X 5)-1)/(0.15/2)]

FVoa = 125,000 x 14.15

FVoa = Php 1,768,385.94

FVD Life Computation

A = 150,000

R = 0.10

T = 5 years

M = 2

FVoa = 150,000 x [((1+0.10/2)^(2 X 5)-1)/(0.10/2)]

FVoa = 150,000 x 12.58

FVoa = Php 1,886,683.88

ALA Philippines Computation

A = 100,000

R = 0.20

T = 5 years

M = 2

FVoa = 100,000 x [((1+0.20/2)^(2 X 5)-1)/(0.20/2)]

FVoa = 100,000 x 15.94

FVoa = Php 1,593,742.46​

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​PV of Ordinary Annuity

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​You are now 55 years old and you already want to retire to fulfill your dream of enjoying your life and travelling the world. Currently, your medical records show that you are healthy for your age – you made sure of this by maintaining a healthy lifestyle. Older members of your family reach the age of up to 90 years old and you think you’ll still be strong enough to travel until you’re 75. You project your monthly travel expense for the next 20 years of your life at around Php50,000-60,000. You’re looking at annuity policies offered by three insurance companies.

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You are willing to use up to Php7 million of your savings to buy an annuity policy so you would be receiving monthly payments for the next 35 years of your life. ​

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Options:​

• ManoLife – 6% fixed annual interest; Php45,000 monthly payment​

• StarLife – 5% fixed annual interest rate; Php55,000 monthly payment​

• AZA – 9% fixed annual interest rate; 60,000 monthly payment

Sinking Funds

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