Question

2.What is the regular payment of the annuity if one needs to pay quarterly, the present value is P125,000.00 with an interest rate of 6% compounded monthly, and the total payment of 25?

Answer 1

Periodic payment (R) = Present value ÷ Present value annuity factor (19.1016%, 25 years)

= P125,000/5.168943

= P24,183

Therefore regular quarterly payment is P24,183.

Calculations:

Given that interest rate is 6% compounded monthly. Regular payment is quarterly and total payments are 25. So that, we need to find quarterly interest rate.

Quarterly interest rate = 6%+6%(1.06)+(6%(1.06)(1.06)) = 19.1016%

Present value of annuity at 19.1016% for 25 payments are as follows,

1	1/(1.191016)^1	0.839619
2	1/(1.191016)^2	0.704961
3	1/(1.191016)^3	0.591898
4	1/(1.191016)^4	0.496969
5	1/(1.191016)^5	0.417265
6	1/(1.191016)^6	0.350344
7	1/(1.191016)^7	0.294155
8	1/(1.191016)^8	0.246979
9	1/(1.191016)^9	0.207368
10	1/(1.191016)^10	0.17411
11	1/(1.191016)^11	0.146186
12	1/(1.191016)^12	0.122741
13	1/(1.191016)^13	0.103056
14	1/(1.191016)^14	0.086527
15	1/(1.191016)^15	0.07265
16	1/(1.191016)^16	0.060998
17	1/(1.191016)^17	0.051215
18	1/(1.191016)^18	0.043001
19	1/(1.191016)^19	0.036105
20	1/(1.191016)^20	0.030314
21	1/(1.191016)^21	0.025453
22	1/(1.191016)^22	0.02137
23	1/(1.191016)^23	0.017943
24	1/(1.191016)^24	0.015065
25	1/(1.191016)^25	0.012649
Total		5.168943