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Given:: P 1000 P N 10 Years I 8 % 0.08 FV ?

A man deposited $1000 each year for 10 years into a bank account paying 8% annual interest. He made no additional deposits for the next 5 years. The question asks to calculate the total amount in the account at the end of 15 years.

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428 views3 pages

Given:: P 1000 P N 10 Years I 8 % 0.08 FV ?

A man deposited $1000 each year for 10 years into a bank account paying 8% annual interest. He made no additional deposits for the next 5 years. The question asks to calculate the total amount in the account at the end of 15 years.

Uploaded by

Harabas Black
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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17. A man deposits 1000P every year for 10 years in a bank.

He makes no deposit during the


subsequent 5 years. If the bank pays 8% interest, find the amount of the account at the end of 15
years.
Given: P=1000 P
n=10 years
i=8 % ; 0.08
Required: F V T =?

Solution: Let F V 10 be the amount of the account at the end of 10 years


F V T be the amount of the account at the end of 15 years

( 1+i )n−1
F V 10=P ( i )
( 1+0.08 )10−1
F V 10=( 1000 P ) ( 0.08 )
F V 10=( 1000 P ) ( 14.48656247 )
F V 10=14486.56247 P amount of the account at the end of 10 years

F V T =F V 10 ( 1+i )n
F V T =( 14486.56247 P )( 1+0.08 )5
FV T =21285.51 P

FV T =21285.51 P

18. Twenty-five thousand pesos is deposited in a savings account that pays 5% interest,
compounded semi-annually. Equal annual withdrawals are to be made from the account,
beginning one year from now and continuing forever. Find the maximum amount of the equal
annual withdrawal.
Given: P=25,000 P
5
i=5 % ; % compounded semi−annually=2.5 %∨0.025
2
Required: W =?
Solution: A=Pi
A=( 25,000 P )( 0.025 )
A=625 P

( 1+i )n−1
W =A
i
( 1+0.025 )2−1
W =( 625 P ) ( 0.025 )
W =1265.6 3 P
19. What amount of money deposited 50 years ago at 8% interest would now provide a perpetual
payment of 10000P per year
Given: P=10,000 P
n=50 years
i=8 % ; 0.08
Required: sda
Solution: Draw Cash Flow Diagram (CFD)
10,000
P p=
0.08
A A A = 10,000P/yr
i=8 % per year
50
0 ∞
1 2 3

50
P ( 1.08 )
P

Σ↑=Σ↓
10,000
=P ( 1.08 )50
0.08
P=2665.15 P

20. A man buys a motor cycle. There will be no maintenance cost the first year as the motor
cycle is sold with one year free maintenance. The 2nd year the maintenance is estimated at
2000P. In subsequent years the maintenance cost will increase by 2000P per year. How much
would need to be set aside now at 5% interest to pay the maintenance costs of the motor cycle for
the first 6 years of ownership?
Given: i=15 %∨0.15
Required: X Generator =?
4 3 2
Solution: P ( 1+ i ) =P ( 1+ i ) + P ( 1+i ) + P
X −50,000 P ( 1.15 )4 =30,000 P ( 1.15 )3 + 40,000 P ( 1.15 )2 +74,374.34 P
1.74900625 X−87,450,3125 P=45,626,25 P+52,900 P+74,374.38 P
1.74900625 X=174,900.59 P+87,450,3125 P
262,350.4025 P
1.74900625 X=
1.74900625 X
X Generator =150,000.00 P

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