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
Related questions
Question
Solve for activity no.5
Transcribed Image Text:at
Activity 5: Give Me the Periodic Payment of the following
The cash flow of this annuity is illustrated in the time diagram given
Solution.
below.
P=100000
R= ?
R=?
R= ?
Since
P =R1-(1+j)¬n
R = P/ 1-(1+j)¬n
= 100 000O/
1-(1+0.08)-3
then,
100,000
0.08
2.57709699
R = 38,803.35
Thus, the man should pay P 38,803.35 every year for three vee
ordinary annuities.
Use the formula: R = P/1-(3
or R = F/
Monthly payment of the future value of P 50,000 for 1 year with an intere
rate of 10% compounded monthly.
Quarterly payment of an accumulated amount of P 80,000 for 2 years with
interest rate of 8% compounded quarterly.
Payment every six months for the present value of P 100,000 for 2 years
with an interest rate of 12% compounded semi-annually.
1.
2.
3.
Additional Examples
Aling Paring started to deposit P 2,000 quarterly in a fund that pays 5.5%
compounded quarterly. How much will be in the fund after 6 years?
1.
Given: R = P 2,000
m = 4
t = 6 years
i(12) = 5.5% = 0.055
0.055
j =
= 0.01375
4
n = trm =
(6)(4) = 24 periods
Find: F
Solution.
F =
= 2,000(1+0.01375)²4 - 1
0.01375
- 1
= 2,000(1.01375)²4
0.01375
= 2,00o1.38784451
0.01375
= 2,00 01.38784451 - 1
0.01375
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