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  • Homework - TVM (Questions)

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    loganramen
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    The document contains 8 math word problems involving compound interest calculations: 1) Calculating the total amount received after borrowing $5,000 at 5% interest for 4 years 2) Calculating interest paid on a $1,500,000 loan at 13% interest over 5 years 3) Calculating interest if the interest in problem 2 was compounded yearly instead of monthly 4) Calculating the future value of investing $1,500,000 at 13% interest for 5 years 5) Calculating the future value of investing $6,000 at various rates and periods of time 6) Calculating the amount needed for an initial deposit to reach $3,000,000 in 6 years at 6

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    The document contains 8 math word problems involving compound interest calculations: 1) Calculating the total amount received after borrowing $5,000 at 5% interest for 4 years 2) Calculating interest paid on a $1,500,000 loan at 13% interest over 5 years 3) Calculating interest if the interest in problem 2 was compounded yearly instead of monthly 4) Calculating the future value of investing $1,500,000 at 13% interest for 5 years 5) Calculating the future value of investing $6,000 at various rates and periods of time 6) Calculating the amount needed for an initial deposit to reach $3,000,000 in 6 years at 6

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    5 views1 page

    Homework - TVM (Questions)

    Uploaded by

    loganramen
    The document contains 8 math word problems involving compound interest calculations: 1) Calculating the total amount received after borrowing $5,000 at 5% interest for 4 years 2) Calculating interest paid on a $1,500,000 loan at 13% interest over 5 years 3) Calculating interest if the interest in problem 2 was compounded yearly instead of monthly 4) Calculating the future value of investing $1,500,000 at 13% interest for 5 years 5) Calculating the future value of investing $6,000 at various rates and periods of time 6) Calculating the amount needed for an initial deposit to reach $3,000,000 in 6 years at 6

    Copyright:

    © All Rights Reserved
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    of 1

    1.

    A friend of yours borrowed P5,000 at 5% interest provided that she pays you
    back the P5,000 plus interest after 4 years. How much should you receive from
    her?

    2. You borrowed P1,500,000 from the bank and you agree to pay off the loan after 5
    years from now and during that period you paid 13% interest on the loan. How
    much interest did you pay for the money that you borrowed?

    3. Using the figures in no. 2, what would be the interest in pesos if the interest
    charge to you was compounded yearly?

    4. Now let’s assume you were enticed to invest P1,500,000 with 13% interest per
    annum. How much will you receive in 5 years?

    5. Compute the future value of P6,000 compounded annual for


    a. 5 years at 5%
    b. 5 years at 8%
    c. 10 years at 5%
    d. Why is the interest earned in letter “c” not twice the amount earned in letter
    “a”?

    6. Let’s say your friend wish to have P3,000,000 saved by the end of six years.
    Suppose that he deposited this money today in an account that pays 6% interest,
    compounded annually. How much must your friend deposit today to meet her
    goal?

    7. How much would you have to deposit today in an account that pays 7% annual
    interest, compounded quarterly, if you wish to have a balance of P100,000 at the
    end of 10 years?

    8. Suppose you have two investment opportunities that promise P5,000,000 in 20


    years.
    Investment Bank 1: A return of 6% per year compounded monthly
    Investment Bank 2: A return of 4.6% per year, compounded quarterly
    Which bank will you invest your money?

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