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Background

With a total of 12 years experience in teaching and tutoring finance, tutor trainer Valerie has trained a group of finance tutors who coach students and working adults. Having graduated with first class honors and the gold medal award, she now makes it her mission to impart her study secrets to her starCresto students. 

Only tutors who have a review score of more than 4 out of 5 stars are retained, to ensure quality of starCresto Tutors. We currently have ex NIE trained teachers, ex lecturers and many other qualified finance professionals under our wings.

We offer both one-to-one and group tuition. For group tuition, the optimal number of students per class is between 4 to 6. Please form your own group because this will facilitate our teaching methodology. 

Teaching Methodology:

1. Understanding concepts and application of concept to questions

2. Developing graphing skills

3. Identifying exam trends and skills (Questions spotting)

4. Practicing variety of questions to prepare you for your exam

5. Simplifying difficult concepts

6. Identifying and improving your weakness

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Student's Profile:

> Tertiary Student --

**Poly / JC (NYP, RP, SP, TP, NP, MDIS, Informatics, SIM, SAS, ACSI)

**University (NTU, NUS, SMU, Imperial College, London School of Economics, University of Durham, Uni SIM, UOL, RMIT, SAS, MDIS, University of Southern Australia, James Cook University, University of Newcastle, London School of Economics, Manchester Business School, University of Nottingham, Melbourne Business School)

**Master (Insead, Singapore Management University, NTU, UCLA, UC Berkeley, Manchester, Uni of Southern Australia, Uni of Buffalo, Uni of Adelaide, NUS, University of State of New York)

> Working Adults -- Managers, Deputy Directors, Managing Directors, Doctors, Divisional Directors, Auditors, Analyst, Credit Advisor, AVP

Tutors’ Trainer’s Profile

> Name -- Valerie Chai Hui Yee

> O Level -- 8 Distinctions for O'Level

> Diploma -- Singapore Polytechnic: Merit Diploma, Honours Roll, SIM Award, Singapore Polytechnic and School of Business Scholar

> Degree -- Nanyang Business School NTU: First Class Honours, Dean List, C.H. Wee Gold Medal, Sumitomo Banking Corporation Scholar

> Post Graduate -- Completed Certified Financial Analyst

> Experience -- 12 years of tutoring, 5 years Corporate Trainer

> Status -- Full time tutor and trainer

For more information, you can visit:

1. Company's profile: www.starcresto.com

2. Tutor Trainer’s profile: http://www.tertiarytuition.com

What is Annuity? Questions on annuity due, ordinary annuity, deferred annuity

What is ANNUITY in Finance Concept? 

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A lot of my students get confused with the concepts of annuity. So what exactly is annuity?

You can see annuity as a fixed amount of cash-flow that you will be getting or paying over a fixed interval. 

For instance, getting $100 in year 1, year 2 and year 3. $100 is the fixed amount of cash-flow and 1 year apart is the fixed interval. 

Having said that, getting $100 in year 1, year 3 and year 4 for instance is no longer an annuity as the interval is no longer one year apart since year 2 is being skipped. The interval is not limited to year, it can be monthly, weekly, 2 years interval etc as long as the same cash-flow is paid over same interval. 

There are a few types of annuity as follow:

1. Annuity Due - cash inflow or  outflow that occurs immediately     
2. Ordinary Annuity - cash inflow or  outflow that occurs at the end of the year
3. Deferred Annuity - cash inflow or  outflow that occurs only after a few years
4. Perpetuity Annuity - cash inflow or  outflow that occurs forever
    
Consider the questions as follow:

1. John has just been employed by a prestigious firm, drawing an annual salary of $300,000, paid at the end of each year. He plans to work for five years before retiring. He buys a new luxury home with mortgage repayments of $5,000 per month for the next 20 years (payable at the end of each month), and donates $10,000 per annum forever to his favourite charity. What annual amount, in present value terms, can John withdraw for the first five years of his retirement from the remainder of his savings? Assume an annual interest rate of 6% p.a.

• Is there annuity?
• What is the first step to tackling this question?
• Do you know what you are supposed to find?

2. Kristy has to make rental payments of $1,000 at the start of every month, throughout the four-year duration of her university course. Her university fees are $4,000 to be paid at the start of each year. She earns $1,500 per month (paid at the end of each month) from a part-time job. Assume an interest rate of 8% p.a. and that she keeps the part-time job for the next four years. How much money, in present value terms, can she withdraw each month for the next four years?

• What are the different annuity involved?

• Can you draw the timeline?

** If your school allows you to use financial calculator, please make use of your financial calculator to help you solve your annuity problem.

The next post will be on uneven cash flow. Stay Tune!

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