FIRST ASSIGNMENT:The difference between Compound Interest andQ1Simple Interest on a certain sum of money at 10 % per annumfor 3 years is Rs. 930. Find the principal if it is known that theinterest is compounded annually.What would $1000 become in a saving accountQ2at 3% per year for 3 years when the interest is notcompounded (simple interest)? What would the sameamount become after 3 years with the same rate butcompounded annually?$1200 is placed in an account at 4%Q3compounded annually for 2 years. It is then withdrawnat the end of the two years and placed in another bank atthe rate of 5% compounded annually for 4 years. Whatis the balance in the second account after the 4 years.An amount of $1,500 is invested for 5 yearsQ4at the rates of 2% for the first two years, 5% for thethird year and 6% for the fourth and fifth years allcompounded Annually. What is the total amount atthe end of the 5 years?A principal of $2000 is placed in a savingsQ5account at 3% per annum compounded annually.How much is in the account after one year, twoyears and three years?

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Q1 Simple Interest on a certain sum of money at 10 % per annum for 3 years is Rs. 930. Find the principal if it is known that the interest is compounded annually. The difference between Compound Interest and

Q1 Simple Interest on a certain sum of money at 10 % per annum for 3 years is Rs. 930. Find the principal if it is known that the interest is compounded annually. The difference between Compound Interest and

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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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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FIRST ASSIGNMENT:
The difference between Compound Interest and
Q1
Simple Interest on a certain sum of money at 10 % per annum
for 3 years is Rs. 930. Find the principal if it is known that the
interest is compounded annually.
What would $1000 become in a saving account
Q2
at 3% per year for 3 years when the interest is not
compounded (simple interest)? What would the same
amount become after 3 years with the same rate but
compounded annually?
$1200 is placed in an account at 4%
Q3
compounded annually for 2 years. It is then withdrawn
at the end of the two years and placed in another bank at
the rate of 5% compounded annually for 4 years. What
is the balance in the second account after the 4 years.
An amount of $1,500 is invested for 5 years
Q4
at the rates of 2% for the first two years, 5% for the
third year and 6% for the fourth and fifth years all
compounded Annually. What is the total amount at
the end of the 5 years?
A principal of $2000 is placed in a savings
Q5
account at 3% per annum compounded annually.
How much is in the account after one year, two
years and three years?

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