AT

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- FDNBUSM - C32
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- PROBLEM SET #2
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- Group 8
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- Barrion | Tan | Tumaneng
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- Problem #1
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- 1. How many conversions are needed for a P500,000.00 principal to earn interest of P20,310.00 if it is invested at 4% compounded quarterly?
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- Problem #1
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- Given: n = ? P = P500,000 I = P20,310 F = 520,310 j = 4% or 0.04 m = 4 (quarterly)
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- Formula: F = P(1 + i)^n Solution: 520,310 = 500,000 (1 + 0.04/4)^n 520,310/500,000 = (1 + 0.04/4)^n n = log 520,310/500,000 / log (1+0.04/4) n = 4.00
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- Answer: For the principal amount of P500,000 to earn an interest of P20,310, the conversion period must be 4.
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- Problem #2
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- 2. Nana the mage promised his grandson Lesly that he would give him $6,000 8 years from today for graduating from high school. Assume money is worth 6% interest compounded semiannually. What is the present value of this $6,000?
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- Problem #2
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- Given: P = ? F = $6,000 t = 8 years j = 6% or 0.06 m = 2 (semianually)
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- Formula: F = P(1 + i)^n P = F / (1 + i)^n Solution: P = 6,000 / (1 + 0.06/2)^(8)(2) P = 3,739.00
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- Answer: Now, the present value of Nana's gift is $3,739.00
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- Problem #3
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- 3. Katherine, owner of a local Subway shop, loaned $40,000 to Pete Hall to help him open a Subway franchise. Pete plans to repay Katherine at the end of 8 years with 6% interest compounded semiannually. How much will Katherine receive at the end of 8 years?
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- Problem #3
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- Given: F = ? P = $40,000 t = 8 years j = 6% or 0.06 m = 2 (semianually)
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- Formula: F = P(1 + i)^n Solution: F = 40,000 (1 + 0.06/2)^(8)(2) F = 64,188.26
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- Answer: Katherine will receive $64,188.26 at the end of 8 years
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- THANK YOU FOR WATCHING!
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- Barrion | Tan | Tumaneng