Long Quiz:

1. Ms. Lames will deposit amounting to P5,050 in a particular bank that incurred 8% in 1
year. What is the future value of Ms. Lames' deposit?

2. Assuming P500,000 was placed in a 120-day time deposit earning 10% interest.
Compute the ordinary and exact interest.
3. The sum of P3 million was set aside at the beginning of the year and management
wants to know the compound value of this fund at the end of ten years. There are ten
full years of compounding at an interest rate of 8 percent. Compute using the formula
FVn = PV (1 + i)n
4. How much will P5,000 deposited today at 5 percent compounded annually be worth
after five years? Compute Year 1, Year 2, Year 3, Year 4 and Year 5 individually.
Discussion Questions:
1. Why there is a need to determine future value/present value of money? Give
examples.
Investors can anticipate, to variable degrees of accuracy, the potential profit from
various investments using future value. Given a certain rate of return, present
value is the current value of a future financial asset or cash flow stream.

For investors and financial planners, the future value is crucial because they use
it to predict how much an investment made now will be worth in the future.
Investors can make wise investment choices based on their projected demands
by knowing the future worth.
2. What is the difference between annuity due and ordinary annuity?

annuity due is a series of payments made at the beginning of each period in the
series. It is also the rents occur at the beginning of each period. The first rent will
occur now. E.g. rent payments, which are typically due on the day commencing
with the rental period.

3. How is future value of money computed?

4. What is discounting?
5. What is the effect of inflation in the time value of money?
Please submit using yellow paper at exactly 6:30 at the Director's Office. Ms. Gabutero,
please take charge.