Time Value of money

 

Question-1.                                                                                                                       

Calculate the value where you find question mark “?”. All values should be determined up to four decimal places

	Time Value of Money
Q1	PV	r	n	FV	I (interest amount)	Compounded
a	50,000	10.50%	5 years	8433	N/A	Monthly
b	9500	9%	15 years	2,500,000	N/A	Quarterly
c	140,000	58.5%	3 years	200,000	60,000	Semi annual
d	200,000	7.50%	9 year	400,000	200,000	Quarterly
e	8774	12%	10 years	N/A	500,000	yearly

 

Solve: Ans No 01.

(a)         Future value formula:

      FV= PV(1+r/12) ^12n

 

      FV= 50,000(1+0.105/12) ^12*5

               FV =84330

 

(b)   PV=FV(1+r/4) ^4*15

PV=2,500,000(1+0.09/4) ^4*15

    PV   =95003  

 

(c)   r= {FV/PV} ^1/n

r= {140,000/200,000} ^1/2*3

        r= 0.585   r=58.5%

 

(d)  n= 1/m {log(FV/PV) / log(1+r/m)}

n= 1/4 {log(400,000/200,000) / log(1+0.075/4)}

                     n= 9

 

(e)    FV= pmt{(1+r) ^n -1/r}

FV= 500,000{(1+0.12)^10 -1/0.12}

     FV= 8774