TIME VALUE OF MONEY

Compute the interest of the following:

A1 25,000 at simple interest for 1 year
A2 30,000 at 9.5 simple interest fro 90 days
A3 60,000 at 12.5 simple interest fro 2 years and 6 months
A4 80,000 at 10% simple interest for 120 days.

Compute the futue value of the following single investments

B1 20,000 at 8 % interest compunded quarterly for 4 years
B2 30,000 at 10% interest compounded semi-annually for 10 years
B3 50,000 at 12% interest compounded monthly for 3 years
B4 60,000 at 9% interest compounded bi-monthly for 5 years
B5 100,000 at 6% interest compounded annualy for 7 years

Compute the future value of the following annuity investments

C1 6,000 quarterly investment at 8% interest compounded quarterly for 8 years
C2 4,000 monthly investment at 6% interest compounded monthly for 4 years
C3 8,000 semi annual investment at 9% interest compounded semi annually for 10 years
C4 10,000 bi-monthly investment at 9% interest compounded bi-monthly for 6 years
C5 20,000 annual investment at 8.5% interest compounded annually for 15 years

Compute for the present value of the following single amount

D1 250,000 in 8 years compounded annually at 8 %
D2 400,000 in 5 years compounded semi annually at 9%
D3 600,000 in 4 years compounded quarterly at 10%
D4 500,000 in 5 years compounded bi monthly at 9%
D5 400,000 in 4 years compounded monthly at 9%

Compute the present value of the following annuity investments

E1 5,000 quarterly investment at 6% interest compouned quarterly for 5 years
E2 3,000 monthly investment at 15% interest compounded monthly for 4 years
E3 6,000 annual investment at 10% interest compounded annually fro 25 years
E4 4,000 semi annual investment at 9% interest compounded semi annual for 8 years
E5 7,000 bi monthly investment at 12% interest compounded bi monthly for 5 years

F1 Jenny's father has offered her two proposal as follows:

Proposal 1: Receive 40,000 in 25 years
Proposal 2: Receive 3,800 today instead of receiving 40,000 in 25 years
The money is discounted at 10% annually.

Required: Determine which proposal Jenny should accept.

F2 Two commercial banks are offering investment proposal to Yvone as follows:

Bank 1: 200,000 at 8% compounded semi annually for 10 years
 Bank 2: 200,000 at 6% compounded quarterly for 10 years.

Required: Which investment alternative should Yvone favorably consider?

F3 Nicanor is thinking of securing his retirement by investing 3,000 every end of the month or 10 years.
Two insurance companies has offered him investment opportunities as follows:
Insurance A: Investment earns an interest of 6% compounded quarterly for 10 years
Insurance B: Investment earns an interest of 14% compoundedd semi annually for 10 years.

Required: Determine which insurance compny has more favorable investment proposal.

F4 Angel has invested in Commercial Bank Y a single amount of 300,000 at 9% interest compunded quarterly fro 12 years.
At the end of 12 years, Angel has withdrawn the proceeds of her investment and invested them in Commercial Bank B
at 8% interest compounded semi annually fro another 10 years.

Required: Determine the amount Princess should investment at the end of 10 years.

F5 A commercial bank offers Princess an investment plan to receive 500,000 in 12 years. The money is
worth 10% discounted quarterly.

Required: Determine the amount Princess should invest today.

Answers
A1 1,500.00
A2 712.50
A3 18,750.00
A4 2,667.00
B1 27,456.00
B2 79,599.00
B3 71,540.00
B4 93,786.00
B5 150,360.00
C1 265,620.00
C2 216,391.20
C3 250,971.20
C4 472,760.00
C5 564,646.00
D1 135,075.00
D2 257,560.00
D3 404,160.00
D4 319,900.00
D5 279,440.00
E1 85,843.00
E2 107,794.50
E3 54,462.00
E4 44,936.00
E5 165,775.50
F1 3,692.00 3,800.00 Accept 3,800
F2 438,220.00 362,800.00 Bank 1
F3 162,803.70 122,986.50 Insurance A
F4 872,880.00 1,297,012.00
F5 1,152,850.00
quarterly fro 12 years.
n Commercial Bank B
Formulas:

1. Simple Interest
I= P * R* T

P= Principal
R= Rate
T= Time

2. Future Value
FV= PV * (1+i) ^ n

3. Present Value
PV= FV * (1+i) ^-n

4. Future Value of Annuity

FV= P * {((1+i)^n-1)/i}

5. Future Value of Annuity Due

FV= P * {((1+i)^n-1)/i} * ( 1+i)

6. Present Value of Annuity

PV= FV * {(1- (1+i)^n-)/i}

6. Present Value of Annuity Due

PV= FV * {(1- (1+i)^n-)/i} * (1+i)