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Exercises Fin242 Time Value of Money

The document contains 14 practice questions about time value of money concepts such as future value, present value, interest rates, annuity payments, and compound interest. The questions cover calculating future values, interest rates, present values, annual loan payments, and determining the deposit amount needed to reach a target future value over a specified time period at a given interest rate.

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247 views

Exercises Fin242 Time Value of Money

The document contains 14 practice questions about time value of money concepts such as future value, present value, interest rates, annuity payments, and compound interest. The questions cover calculating future values, interest rates, present values, annual loan payments, and determining the deposit amount needed to reach a target future value over a specified time period at a given interest rate.

Uploaded by

AmaninaYusri
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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EXERCISES FIN242

TIME VALUE OF MONEY

1. Find the future value of a RM100 deposit in the bank for 10 years if the interest rate to
be earned is 5%. (O 99)

2. If RM1000 invested for 8 years is worth RM1593.80 at the end of the 8th year, what is
the annual interest for this investment?

3. You lend a friend RM15,000 for which your friend repays you RM37,322.72 at the end
of five years. What interest rate are you charging your friend? (O 98)

4. A friend borrows from you RM85,000 now and promises to pay RM201,229 in the
future with an interest rate of 9% annually. When will your friend pay you?

5. In December 1963, the first issue of the novel X-File was issued. The price for that
issue was RM13.00. By September 1992, 29 years later. The value of the novel had
risen to RM990. What annual rate of interest would you have earned if you had
bought the novel in 1963 and sold it in 1992? (A 99)

6. Assume today you open an account with RM5,000 with a bank, which pays interest
semi-annually. How much will you have in your account at the end of the fifth year if
the interest rate is 10% per annum? (O 98)

7. What is the present value for these cash flows? RM200 in year 2, RM300 in year 3,
and RM400 in year 6. Interest rate is 10%.

8. Calculate the future value at the end of year 5 of the following cash flow:
RM300 per year for the first three years, RM400 at the end of year 4 and RM500 at
the end of year 5. Interest rate is 10%.

9. Encik. Ahmad borrows RM5,000 to be repaid in 10 years with 12 percent interest.


What is the annual payment of the loan? (N 92)

10. PLUS is financing a new truck with a loan of RM50,000 to be repaid in 10 annual end-
of-year installments of RM10,000. Determine the annual interest rate charged on the
loan. (May 93)

11. If you borrow RM100,000 at an annual interest rate of 10 percent, and you must pay
off the loan in 10 years. What is the required annual payment, if the first payment is
made today?

12. If you would like to accumulate RM10,000 over the next 5 years, how much you must
deposit each year, given a 7% interest rate. (O 99)

13. How much will you have in your account 5 years from now if you are going to deposit
five equal payments of RM2,000, with the first deposit being made today? Assume a
10 percent interest rate compounded annually.(M 98)

14. The company plans to put a fixed amount into the fund each year for ten years. The
first payment is to be made today. Assume that the fund will earn 5 percent a year,
what is the annual contribution that must be made to earn the RM700,000 at the end
of ten years?

28 April 2019

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