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a) Balqish Shamimi deposited RM1,000 into Fund which earns rate of return of 9% per annum effective. At the end of each year, she withdrew the interest earned plus an additional RM100 from the fund. At the end of the tenth year, the fund is depleted. The annual withdrawals of interest and principal are deposited into Fund , which earns rate of return of 9% per annum effective. Determine the accumulated value of Fund  at the end of year 10.

a) Balqish Shamimi deposited RM1,000 into Fund which earns rate of return of 9% per annum effective. At the end of each year, she withdrew the interest earned plus an additional RM100 from the fund. At the end of the tenth year, the fund is depleted. The annual withdrawals of interest and principal are deposited into Fund , which earns rate of return of 9% per annum effective. Determine the accumulated value of Fund  at the end of year 10.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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a) Balqish Shamimi deposited RM1,000 into Fund which earns rate of return of 9% per annum effective. At the end of each year, she withdrew the interest earned plus an additional RM100 from the fund. At the end of the tenth year, the fund is depleted. The annual withdrawals of interest and principal are deposited into Fund , which earns rate of return of 9% per annum effective.

Determine the accumulated value of Fund  at the end of year 10.

 

 

b) Calculate the present value as at 1st January 2021 of an annuity payable annually in arrears for 12 years. The first payment is RM500 and subsequent payments increase by 3% per annum compound.

Assume an effective interest rate of 10% per annum.

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