1. A man deposit $500 in a credit union at the end of each year for five years.

The credit union pays 5%

compounded annually. At the end of five years, immediately following his fifth deposit, how much will
he have in his account?
Year Principal Interest (5%) Amount owned Amount paid

USD 500

1 USD 25 USD 525

2 USD 26 USD 551

3 USD 28 USD 579

4 USD 29 USD 608

5 USD 30 USD 638 USD 638

So, the amount of money owned by the man after 5 years is 638 US Dollar.

2. On January 1, a man deposits $5000 in a credit union that pays 8% interest compounded annually. He
wishes to withdraw all the money in five equal end of year sum, beginning December 31st of the first
year. How should he withdraw each year?

Year Principal Interest (5%) Amount owned Amount paid

$5000

1 $ 400 $5400

2 $ 432 $5832

3 $ 467 $6299

4 $504 $6802

5 $544 $7347 $7347

The withdrawal for each year would be $5400 for year 1, $5832 for year 2, $6299 for year 3, $6802 for
year 4, and $7347 for year 5.

3. Consider the following cash flow diagram if the interest rate is 12%, calculate the P value !
P = A(1+ i)-1 + A(1+ i)-2 + ……+ A(1 + i)-n
=(6000*(1+12)^-1)+(10000*(1+12)^-2)+(3000*(1+12)^-3)+(12000*(1+12)^-4)+(8000*(1+12)^-5 =$522,52
So, the P value is $522,52.

4. The amount of money that must be saved from next year to the 6th year in the same amount so that
at the end of the 10th year, the money collected is Rp. 20 million is? (if i = 10% / year )
P(A/P,i%,n) =20000000*(10/(((1+10)^10)-1)) = $522,52

5. If you save your money in a bank from next year to the 5th year of Rp. 20 million per year, how much
money will you get at the end of year 10th? (if i = 10% / year )
N1=5
N2=10
F1=20000000
It means, there’s no “i”. And we can assume with common sense presumption, that the P value is
10000000. And the A cumulative after 5 years is 10000000. So, the interest for each year valued about
10000000/5=2000000. If we stretch it to 10 years, means that the additional cumulative interest would
be valued about 2000000x5=10000000. Then, the value after 10 years would be
20000000+10000000=30000000