Llagas, Angela Fye C.

ABMT201A

Present Value
Time Value of Money

PROBLEM SOLVING: Solve the following items. Write your answers and complete solutions on the space
provided. (2 items x 10 points)

1. Mattel Inc. wants to save its assets for future use. Compute how much is needed to be saved now for
the following:

a. P120,000 in 12 years at 8% interest

Given:

Future Value = ₱120,000

Interest Rate = 8% --> 0.08
Time Period = 12 years
Present Value = ?

Solution:

FV
PV =
( 1+i )t
120,000
PV =
( 1+0.08 )12
120,000
PV =
2.5182
PV =₱ 47,653. 09
b. P150,000 in 20 years at 5% interest

Given:

Future Value = ₱150,000

Interest Rate = 5% --> 0.05
Time Period = 20 years
Present Value = ?

Solution:

FV
PV =
( 1+i )t
150,000
PV =
( 1+0.05 )20
150,000
PV =
2.6533
PV =₱ 56,533.37