1.

A loan for an amount of 200,000 euro is reimbursed with 24 monthly payments of a fixed amount A at an annual nominal rat
D N m r
200000 24 12 0.15
(a) Compute the value of A.
d i a(n,i)
0.987654321 0.0125 20.62423451
A
9,697.33 €

(b) Compute the internal rate of return.

IRR
16.08%

2. A loan for an amount of 1,000 euro is paid with 10 constant payments, at a frequency of one payment evert 6 months, with a
D N delta t r_e
1000 10 0.5 0.2

d i a(N,i) R
0.912870929 0.095445115 6.266663599 159.5745462

k D R I P
0 1000
1 935.87 € 159.57 € 95.45 € 64.13 €
2 865.62 € 159.57 € 89.32 € 70.25 €
3 788.66 € 159.57 € 82.62 € 76.96 €
4 704.36 € 159.57 € 75.27 € 84.30 €
5 612.02 € 159.57 € 67.23 € 92.35 €
6 510.86 € 159.57 € 58.41 € 101.16 €
7 400.04 € 159.57 € 48.76 € 110.82 €
8 278.65 € 159.57 € 38.18 € 121.39 €
9 145.67 € 159.57 € 26.60 € 132.98 €
10 0.00 € 159.57 € 13.90 € 145.67 €

3. Consider an annual nominal interest rate r continuously compounded.

(a) Determine the formula of the present value of an infinite annuity with monthly payments A

i=exp(r/12)-1 a=1/i

(b) Compute the present value of the finite annuity with 5 yearly payments all equal to 100, with the first payment taking place

R N r
100 5 0.1
i d a(N,i) PV_0 a:(N,i)
0.105170918 0.904837418 3.741237098 380.41 € 4.134706438

4. Let d be the discount factor over a period of length 1. Determine the expressions for the Future Value of the unitary annuity a

FV_ant=a(n,i)d^(-n-1)=d^(-1)(d^(-n)-1)/1
FV_post=a(n,i)d^(-n)=(d^(-n)-1)/i

5. Compute the internal rate of return of an investment of V = 1000 euros at time 0 for a cash flow consisting of constant paym
V y PV V-PV
1000 9.92% 1000 0%
t R d r*d
1 0.5 100 0.953824728 95.3824728
2 1 100 0.909781612 90.97816117
3 1.5 100 0.867772198 86.77721983
4 2 100 0.827702581 82.7702581
5 2.5 100 0.789483189 78.94831891
6 3 100 0.753028588 75.30285881
7 3.5 100 0.718257288 71.82572882
8 4 100 0.685091563 68.50915625
9 4.5 100 0.653457273 65.34572733
10 5 100 0.623283706 62.32837059
11 5.5 100 0.594503411 59.45034112
12 6 100 0.567052055 56.70520545
13 6.5 100 0.540868272 54.08682716
14 7 100 0.515893532 51.58935321

6. You want to start saving now to get a pension when you will retire, that is 40 years from now. You estimate that you will nee

P T_A m T_B r1 r2 r3
2000 40 12 30 0.02 0.05 0.06
N_A N_B d1 d2 d3
480 360 0.998351142 0.995942407 0.995156028
a1 a2 a3
331.8112043 211.4441719 186.3713826
V(T_A) V(T_A) V(T_A)
663622.4086 422888.3439 372742.7653
b1 b2 b3
732.6522999 1488.564584 1916.963473
R1 R2 R3
905.78 € 284.09 € 194.44 €
mount A at an annual nominal rate equal to 15%, monthly compounded.
k
IRR d i a(N,i) PV=A*a(N,i) diff 0
16.08% 0.987654321 0.0125 20.62423451 200,000.00 € 0.00 € 1
2
3
4
5
6
7
8
9
10
11
12
payment evert 6 months, with an effective rate r = 20%. Compute the running amortization table. Report the line corresponding to the seco
13
14
15
16
17
18
19
20
21
22
23
24

th the first payment taking place 10 months from now, when r = 10%.
 PV(10m) PV(0)
413.470643783 380.41 €

ure Value of the unitary annuity at time n, that is the value at time n of n payments of amount equal to 1, in the two cases of payments antic

low consisting of constant payments R = 100 every half-year for 7 years.

w. You estimate that you will need a pension of P = 2000 euros per month for 30 years after your retirement. What is the amount R that you

This is the PV at time T_A of the anticipated annuity from T_A to T_A+T_B (the retirement period)

This is the FV at time T_A of the anticipated annuity from 0 to T_A (the working period)
b1*R=V(T_A)
D A I P
200000
192,802.67 € 9,697.33 € 2500 7,197.33 €
185,515.37 € 9,697.33 € 2410.03338 7,287.30 €
178,136.99 € 9,697.33 € 2318.942177 7,378.39 €
170,666.37 € 9,697.33 € 2226.712334 7,470.62 €
163,102.37 € 9,697.33 € 2133.329618 7,564.00 €
155,443.82 € 9,697.33 € 2038.779618 7,658.55 €
147,689.54 € 9,697.33 € 1943.047743 7,754.28 €
139,838.33 € 9,697.33 € 1846.11922 7,851.21 €
131,888.98 € 9,697.33 € 1747.97909 7,949.35 €
123,840.26 € 9,697.33 € 1648.612209 8,048.72 €
115,690.93 € 9,697.33 € 1548.003241 8,149.33 €
107,439.74 € 9,697.33 € 1446.136662 8,251.19 €
99,085.41 € 9,697.33 € 1342.99675 8,354.33 €
90,626.65 € 9,697.33 € 1238.567589 8,458.76 €
82,062.15 € 9,697.33 € 1132.833064 8,564.50 €
73,390.60 € 9,697.33 € 1025.776857 8,671.55 €
64,610.65 € 9,697.33 € 917.3824475 8,779.95 €
55,720.95 € 9,697.33 € 807.633108 8,889.70 €
46,720.13 € 9,697.33 € 696.5119017 9,000.82 €
37,606.81 € 9,697.33 € 584.0016804 9,113.33 €
28,379.56 € 9,697.33 € 470.0850813 9,227.24 €
19,036.98 € 9,697.33 € 354.7445247 9,342.59 €
9,577.61 € 9,697.33 € 237.9622111 9,459.37 €
- 0.00 € 9,697.33 € 119.7201186 9,577.61 €
o cases of payments anticipated (i.e. first payment at time 0) and postponed (i.e. first payment at time 1).

t is the amount R that you should save every month from now to the day when you retire, assuming a constant interest rate r? Consider a co
nterest rate r? Consider a constant (effective) interest rate r and report your monthly payments R for r = 2%, r = 5% and r = 10%.
%, r = 5% and r = 10%.