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Determine the present equivalent value

Determine the present equivalent value

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
Problem 1PS
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1. Determine the present equivalent value of P5,000 paid every 3 months for period of seven years and the rate of interest is 12% compounded quarterly. 2. If P25, 000 is deposited now into a savings account that earns 6% per year, what uniform annual amount could be withdrawn at the end of each year for ten years so that nothing would be left in the account after the 10th withdrawal? 3. An individual is borrowing P100, 000 at 8% interest compounded annually. The loan is to be repaid in equal payments over 30 years. However, just after eight payment is made, lender allows the borrower to triple the payment. The borrower agrees to this increase payment. If the lender is still charging 10% per year, compounded annually, on the unpaid balance of the loan, what is the balance still owed just after the 12th payment is made? 4. A loan of P10, 000 is to be repaid over a period of eight years. During the first four years, exactly half of the loan principal is to be rapid (along with the accumulated compound interest) by uniform series of payments of A1 per year. The other half of the loan principal is to be repaid over four years with accumulated interest by a uniform series of payments of A2 per year. If I = 9% per year, what are the value of A1 and A2? 5. A young woman, 22 years old, has just graduated from college. She accepts a good job and desires to establish her own retirement fund. At the end of each year thereafter she plans to deposit P2,000 in a fund at 15% annual interest. How old will she be when the fund has an accumulated value of P1,000,000? 6. Mr. Reyes borrows P600,000 at 12% compounded annually, agreeing to repay the loan in 15 equal annual payments. How much of the original principal is still unpaid after he has made the 8th payment? 7. A man wishes to have P35,000 when he retires 15 years from now. If he can expect to receive 4% annual interest, how much must he set aside beginning at the end of each of the 15 years?
Transcribed Image Text:1. Determine the present equivalent value of P5,000 paid every 3 months for period of seven years and the rate of interest is 12% compounded quarterly. 2. If P25, 000 is deposited now into a savings account that earns 6% per year, what uniform annual amount could be withdrawn at the end of each year for ten years so that nothing would be left in the account after the 10th withdrawal? 3. An individual is borrowing P100, 000 at 8% interest compounded annually. The loan is to be repaid in equal payments over 30 years. However, just after eight payment is made, lender allows the borrower to triple the payment. The borrower agrees to this increase payment. If the lender is still charging 10% per year, compounded annually, on the unpaid balance of the loan, what is the balance still owed just after the 12th payment is made? 4. A loan of P10, 000 is to be repaid over a period of eight years. During the first four years, exactly half of the loan principal is to be rapid (along with the accumulated compound interest) by uniform series of payments of A1 per year. The other half of the loan principal is to be repaid over four years with accumulated interest by a uniform series of payments of A2 per year. If I = 9% per year, what are the value of A1 and A2? 5. A young woman, 22 years old, has just graduated from college. She accepts a good job and desires to establish her own retirement fund. At the end of each year thereafter she plans to deposit P2,000 in a fund at 15% annual interest. How old will she be when the fund has an accumulated value of P1,000,000? 6. Mr. Reyes borrows P600,000 at 12% compounded annually, agreeing to repay the loan in 15 equal annual payments. How much of the original principal is still unpaid after he has made the 8th payment? 7. A man wishes to have P35,000 when he retires 15 years from now. If he can expect to receive 4% annual interest, how much must he set aside beginning at the end of each of the 15 years?
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