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What Single Investment Made Today

This document contains several word problems involving concepts of simple interest, compound interest, annuities, loans, and bonds. It asks the reader to calculate future and present values, interest rates, payment amounts, and time periods for investments that earn interest at various annual rates compounded in different time intervals. The problems cover a wide range of financial scenarios involving deposits, loans, annuity payments, and perpetual bonds or rewards.

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norazimah
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47 views5 pages

What Single Investment Made Today

This document contains several word problems involving concepts of simple interest, compound interest, annuities, loans, and bonds. It asks the reader to calculate future and present values, interest rates, payment amounts, and time periods for investments that earn interest at various annual rates compounded in different time intervals. The problems cover a wide range of financial scenarios involving deposits, loans, annuity payments, and perpetual bonds or rewards.

Uploaded by

norazimah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

What single investment made today, earning 12%


simple interest, will be worth RM6,880 at the end of 6
years?

2. How much time will it take for an amount of $900 to


yield $81 as interest at 4.5% per annum of simple
interest?

3. A sum of money at simple interest amounts to $815 in 3


years and to 854 in 4 years. What is the sum?

4. What is the future value of $123,000 invested now if the


investment matures at the beginning of seventeenth
year with 14% compounding interest?

5. lrfan has decided to place $500, which he received as a


birthday in a saving account paying 8% interest
compounded annually. How much will accrue to Irfan’s
account in six years’ time?

6. Adila invests $50,000 in a savings account paying an


annual compound interest of 4% for 5 years and then
moves it into savings account that pays 6% interest
compounded annually. How much will Adila’s money
have grown at the end of seven years?

1. What annual interest rate is implied if you lend


someone $1,850 and are repaid $2 078.66 in two years?
2. How long does it take for $856 to grow into $1,122 at an
annual interest rate of 7%?.
3. Hashira intends to buy a new car, the Toyota for
RM57,650 but only has RM20,000 in cash. How many
years will it take for RM20,000 to grow to RM57,650 if it
is invested at 10% interest compounded annually?
4. Let us say Hashira intends to buy the Toyota in five
years’ time. At what rate must his RM20,000 be
compounded annually for it to grow to RM57,650 in five
years?

1. What is the future value of $123,000 invested now if the


investment matures at the beginning of seventeenth
year with 14% compounding interest?
2. lrfan has decided to place $500, which he received as a
birthday in a saving account paying 8% interest
compounded annually. How much will accrue to Irfan’s
account in six years’ time?
3. Adila invests $50,000 in a savings account paying an
annual compound interest of 4% for 5 years and then
moves it into savings account that pays 6% interest
compounded annually. How much will Adila’s money
have grown at the end of seven years?
4. What annual interest rate is implied if you lend
someone $1,850 and are repaid $2 078.66 in two years?
5. How long does it take for $856 to grow into $1,122 at an
annual interest rate of 7%?.
6. Hashira intends to buy a new car, the Toyota for
RM57,650 but only has RM20,000 in cash. How many
years will it take for RM20,000 to grow to RM57,650 if it
is invested at 10% interest compounded annually?
7. Let us say Hashira intends to buy the Toyota in five
years’ time. At what rate must his RM20,000 be
compounded annually for it to grow to RM57,650 in five
years?

1. What is the future value of $123,000 invested now if the


investment matures at the beginning of seventeenth
year with 14% annual compounding interest payable
semi-annually?
2. lrfan has decided to place $500, which he received as a
birthday in a saving account paying 8% annual interest
compounded payable quarterly. How much will accrue
to Irfan’s account in six years’ time?
3. Adila invests $50,000 in a savings account paying an
annual compound interest of 4% for 5 years and then
moves it into savings account that pays 6% annual
interest compounded payable semi-annually. How much
will Adila’s money have grown at the end of seven
years?
4. Hashira intends to buy a new car, the Toyota for
RM57,650 but only has RM20,000 in cash. How many
years will it take for RM20,000 to grow to RM57,650 if it
is invested at 10% anuual interest payable semi-
annually?
5. Let us say Hashira intends to buy the Toyota in five
years’ time. At what rate must his RM20,000 be
compounded semi-annually for it to grow to RM57,650
in five years?

1. If Zafran deposits RM 150 at the end of each year for the


next 8 years in an account that pays 5% interest, how
much money will Zafran has at the end of 8 years?
2. Afiq take out a loan with six equal repayments of RM500
at the beginning of each year. How much was
borrowed? The interest rate is 8% p.a.
3. Shiro take out a loan RM10,000 with 5 equal payments
at the beginning of each year. The interest rate is 6%
p.a. How much she needs to repay each year?
4. A firm borrows RM25,000 from the bank at 12%
compounded annually to purchase some new
machinery. This loan is to be repaid in equal annual
instalments at the end of each year over the next five
years. How much will each annual payment be?
5. Calculate the future value of a 15-year annuity payment
of RM1,500 per year paid at the end of each year at a
rate of 7%. If the payment is made at the beginning of
the year, recalculate the future value.
6. If you win a contest at Aeon you will be given free
grocery valued at RM2,400 per year for the rest of your
life. What is the value of the reward discounted at the
opportunity cost of 8 percent?
7. Assume that a perpetual bond has an RM80.00 per year
interest payment and that the discount rate is 10
percent. What is the present value of this perpetuity?
8. You have just received performance bonus valued
RM100,000. You decided not to use this money but
want to receive constant value of money every year.
How much would you received for the rest of your life if
the money discounted at the opportunity cost of 10%

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