10. 11 12. » RM25,000 is invested for 4 years 9 months. If the investment is offered 12% compounded semi-annually for the first 2 years and 10% com- pounded quarterly for the rest of the period, find the future value of this investment. - RM65,000 is invested for 6 years 9 months. If the investment is offered 5% compounded semi-annually for the first 2 years, 6% compounded monthly for the next 18 months and 7% compounded daily for the rest of the period, find the future value of this investment. . At the end of every year for three years, RM1,000 is invested in an account that offers 8% compounded annually. Find the account amount at the end of the three years. . On 16 April 2013, RM2,000 was invested at 5% compounded semi- annually. Find the amount accumulated on 16 October 2016 if the rate was changed to 8% compounded quarterly beginning 16 April 2014. - Peter deposited RM1,536 on 15 May 2010 into an account that pays 10% compounded quarterly. Find the interest earned on 15 February 2015. . Find the interest earned if RM7,500 is invested for 6 years at 6.4% compounded quarterly. [Modified exam question] Find the interest earned for an investment if the accumulated amount at the end of 6 years is RM2,412.66 and the interest rate given is 8% compounded quarterly. . Aris saved RM25,000 at 8% compounded monthly. Two years later, he withdrew RM14,000 from the savings. Find the amount left in the account. RMX was deposited in a savings account at 4.0% interest compounded monthly. Forty months later, RM4,200 was withdrawn from the account and the balance was RM4,212.39. Find the value of X.x Ps w a > ° 10. (a) What is time value of money? (b) How would you relate the concepts of time value of money and inflation? (c) Explain the difference between simple interest and compound interest. (d) What is meant by the future value of money? (e) What is meant by the present value of money? Explain (a) nominal rate (e) periodic interest rate. (b) effective rate. (£) equation of value. (c) equivalent rates. (g) Rule of 72. (d) frequency of conversions. (h) Rule of 69. Derive the formula $ = P(1 + i)". Shireen invested a certain sum of money in an account that pays 5% compounded quarterly. The account will amount to RM1,000 in 27 months’ time. Calculate the original principal that was invested. . How long will it take for a sum of money to quadruple at 10% compounded annually? ‘At what rate compounded semi-annually will RM2,000 become RM3,500 in five years? ‘A sum of money, X ringgit, was deposited in a savings account at 8% compounded daily on 25 July 2012. On 12 August 2012, RM500 was withdrawn from the account and the balance as of 31 December 2012 was RM8,230. Find the value of X. (Use exact time and assume 360 days per year.) Simon invested RM5,000 into an account that pays 5% compounded semi- annually. He intended to keep the account untouched for five years. However, after three years, he had to withdraw RM3,000. Find the amount left in the account five years from the time he made his investment. United Bank offers two interest rates for fixed deposits: Offer 1: 12% compounded quarterly Offer 2: 13.55% simple interest If you want to invest for one year, which offer would you choose? Show your workings. On 16 April 2012, RM5,000 was invested at 6% compounded semi-annually. Find the amount accumulated on 16 October 2015 if the rate was changed to 8% compounded quarterly beginning 16 April 2014,11, Allan wishes to invest RM8,000 in a fixed deposit account for one has two options: ey AAA Bank which offers 3.7% interest compounded semi-annual, © BBB Bank which offers 3.75% interest compounded annually, ‘Which bank should Allan choose? Give Your "e087 [Modified exam west, 12, (a) Osman invests RM2,500 in a savings account. Calculate the amo, the account at the end of three yearsiftheinterest rateis 8% compoung iy monthly. : i (©) On 1 January 2015, Ah Kiong saved RMI,000 in an account that, 10% interest compounded quarterly. Six months later, he deposi. another RMS0O into the account. Find the amount in the accoun, : 1 January 2016. [Modified exam questio, 13, Find the fature value and interest earned if RM10,000 is invested for thr years at 6% compounded monthly. [Modified exam question 14, Munshi saved RM500 a year ago and X ringgit today, in an account that pay 8.5% compounded semi-annually. Find the value of X if he wants RM1 0 in the account one year from today. months. This investment is offered interes rates of 9% compounded every three months for the first 2 years and 7% Compounded monthly forthe rest ofthe period. Calculate the amount athe énd of the investment period. How much interest was earned? [Modified exam question] 15. RMG600 is invested for 4 years 10 16. A sum of money RMX was deposited in a savings account with interest 7% compounded monthly on 1 June 2013. On 1 September 2015, RMS00 is withdrawn and balance as of | April 2015 is RM6,464.40. Find the value of X. [Modified exam question] 17. RM3,000 is invested for five years at 5% compounded annually. Find the amount at the end of five years and the interest earned. 18, Ah Chong invests RM2,600 in a fund that promises to give interest of 6% compounded semi-annually Find the amount atthe end of four years 19, Find the interest on RM2,000 for three years at 6% compounded semi- annually. Jue and interest earned if RM1,000 is invested for four for 20. Find the future valt inded monthly years at 5% compou a1. Ms. Faridah invested RM8,000 at 7% compounded a Find the interest earned. annually for six years22, A tin mine is estimated to have tin reserves worth two million ringgit. If the monthly extraction is 5% of the value of the reserve the month before, find the value of the tin reserves after two years. 23. A bank pays 10% compounded annually on its three-year fixed deposit account. At the end of the three years, a 3% bonus on the final amount will be paid. Find the effective interest rate that will be earned on this scheme. 24, RM1,000 was invested for two years at 10% simple interest. Calculate the effective rate that was earned. 25. Albert invested RM20,000 in an account that pays 12% compounded monthly. This investment will be given to his four children when they reach 20 years old. Now his four children are 12, 16, 17 and 19 years old, If all his four children will receive equal amounts, find the amount each will receive. 26. A project which requires an initial outlay of RM20,000 will produce the following annual inflows: Year 1 RM3,000 Year 2 _RMS5,000 Year 3 RM7,000 Year 4 RM9,000 Find the net present value of the project if the discount rate is 12% per annum. Should the project be given the green light? 27. (a) Find the future value of RM2,999 invested for 30 months at 6% ‘compounded continuously. (b) Find the amount to be deposited now so as to accumulate RM9,888 in 24 months at 9.5% compounded continuously. 8, ANAS Company is considering two important proposals with the following cash flows. eo ea ey Pay itaa:) pasta é 5 : eee onnt Net cash on Net cash revcresp heme Ch em ROUT Kec 0 RM45,000 RM60,000 1 RM25,000 RM24,000 2 RM20,000 RM25,000 3 RMI15,000 RM30,000 For each project, compute its net present value using a discount rate of 15% Which project should be accepted if the projects are mutually exclusive?2. 22. 23. 25. 27. 28. 29. 31. 32, A deposit of RM7,200 on 30 April 2015 amounts to RM7,500 on 20 July 2015. Using the Banker’s Rule, find (a) the simple interest rate offered, and (b) the value of the deposit on 25 May 2015. A sum of RM1,700 is invested on 4 May 2015 at a simple interest rate of 6% per annum. Find the amount on 3 June 2015 using the Banker's Rule. Find also the interest earned. How long do we need to invest RM10,000 at a simple interest rate of 8% per annum if we want to earn an interest of RM1,200? [Modified exam question] . Hamidah took a loan from a bank that charged a simple interest rate of 8% per annum for the duration of 36 months. If the interest paid was RM450, how much was the loan? ‘A loan of RM800 made on 20 May 2015 would amount to RM818 on 30 ‘August 2019. Find the simple interest rate charged using the Banker’s Rule. . Hariri borrowed RM4,500 from a bank. Eight months later, he paid RM4,800 for the loan. Calculate the simple interest rate charged. [Modified exam question] On 22 June 2015, Sharil borrows RM8,300 from Jamil. Sharil is charged an exact simple interest rate of 8.5% per annum. If the maturity date is 20 October 2015, calculate the interest that Sharil has to pay. ‘Ah Beng invests RM14,000 on 4 May 2015 at a simple interest rate of r% per annum. The amount on 3 June 2015 using the Banker's Rule is RM14,050.00. Find the interest rate, r. [Modified exam question] How long do we need to invest RM3,500 at a simple interest rate of 8% if we want an interest of RM750? (Modified exam question] T£RM6,000 will accumulate to RM7,500 in five years’ time, what is the interest rate compounded annually? On Sonny's third birthday, his father deposited RM4,000 in an account tha! earned 6% interest compounded quarterly, What would be the amount or his 20th birthday? What is the total interest earned? [Modified exam question Fazlina invested RM25,000 in an account that paid 6% compounded monthl for 30 months. Find the interest earned.