By working from year to year as in the worked example above, calculate the amount accumulated after three years at compound interest in the following cases. 1. £500 deposited at 10% p.a. 2. £1000 borrowed at 15% p.a. 3. £150 deposited at 6% p.a. 4. £1200 borrowed at 8.5% p.a. 5. £25 000 borrowed at 13.75% p.a.

By working from year to year as in the worked example above, calculate the amount accumulated after three years at compound interest in the following cases. 1. £500 deposited at 10% p.a. 2. £1000 borrowed at 15% p.a. 3. £150 deposited at 6% p.a. 4. £1200 borrowed at 8.5% p.a. 5. £25 000 borrowed at 13.75% p.a.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

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Exercises
By working from year to year as in the worked example above, calculate the amount
accumulated after three years at compound interest in the following cases.
1.
£500 deposited at 10% p.a.
£1000 borrowed at 15% p.a.
£150 deposited at 6% p.a.
4.
£1200 borrowed at 8.5% p.a.
5.
£25 000 borrowed at 13.75%
pa.
2.
3.

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