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Assignments 1 20222023

1) It will take 7 years for the 9% simple interest account to double to RM 6,000, and 8 years for the 8% compounded interest account to double to RM 6,240. 2) Alternative 1 is better since RM 100 today is worth more than RM 120 two years from now at 8% interest. 3) With the investments of RM 1,000, RM 1,500, and RM 2,000 at 6% compounded annually, the total amount after 10 years would be RM 4,320.

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38 views1 page

Assignments 1 20222023

1) It will take 7 years for the 9% simple interest account to double to RM 6,000, and 8 years for the 8% compounded interest account to double to RM 6,240. 2) Alternative 1 is better since RM 100 today is worth more than RM 120 two years from now at 8% interest. 3) With the investments of RM 1,000, RM 1,500, and RM 2,000 at 6% compounded annually, the total amount after 10 years would be RM 4,320.

Uploaded by

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

1. You deposit RM 3,000 in a savings account that earns 9% simple interest per year. How
many years will it take to double your balance? If instead you deposit the RM 3,000 in
another savings account that earns 8% interest compounded yearly, how many years will it
take to double your balance?

2. Which of the following alternatives would you rather receive, assuming an interest rate of
8% compounded annually?
Alternative 1: Receive RM 100 today;
Alternative 2: Receive RM 120 two years from now.

3. If RM 1,000 is invested now, RM 1,500 two years from now, and RM 2,000 four years from
now at an interest rate of 6% compounded annually, what will be the total amount in 10
years?

4. Part of the income that a machine generates is put into a sinking fund to pay for
replacement of the machine when it wears out. If RM 2,000 is deposited annually at 7%
interest compounded annually, how many years must the machine be kept before a new
machine costing RM 30,000 can be purchased?

5. You deposit your annual bonus into a savings account that pays 6% interest compounded
annually. The size of the bonus increases by RM 1,000 each year, and the initial bonus
amount is RM 3,000. Determine how much will be in the account immediately after the fifth
deposit.

6. What is the amount of 10 equal annual deposits that can provide five annual withdrawals,
where a first withdrawal of RM 3,000 is made at the end of year 11 and subsequent
withdrawals increase at the rate of 6% per year over the previous year’s, if the interest rate
is 8% compounded annually?

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