Solutions to Brief Exercises
1. Don Concordia
8% annual interest
i = 8%
PV = $15,000 FV = ?
0 1 3
n=3
FV = $15,000 (FVF3, 8%)
FV = $15,000 (1.25971)
FV = $18,896
8% annual interest, compounded semiannually
i = 4%
PV = $15,000 FV = ?
0 1 2 3 4 6
n=6
FV = $15,000 (FVF6, 4%)
FV = $15,000 (1.26532)
FV = $18,980
2. Paul Soriano
12% annual interest
i = 12%
PV = ? FV = R$25,000
0 1 2 3 4
n=4
PV = R$25,000 (PVF4, 12%)
PV = R$25,000 (.63552)
PV = R$15,888
12% annual interest, compounded quarterly
i = 3%
PV = ? FV = R$25,000
0 1 2 14 15 16
n = 16
PV = R$25,000 (PVF16, 3%)
PV = R$25,000 (.62317)
PV = R$15,579
3.Alden Richards
i=?
PV = €30,000 FV = €150,000
0 1 2 19 21
n = 21
FV = PV (FVF21, i) PV = FV (PVF21, i)
OR
€150,000 = €30,000 (FVF21, i) €30,000 = €150,000 (PVF21, i)
FVF21, i = 5.0000 PVF21, i = .20000
i = 8% (approximately) i = 8% (approximately)
4. Carl Erlano
i = 5%
PV = $10,000 FV = $17,100
0 ?
n=?
FV = PV (FVFn, 5%) PV = FV (PVFn, 5%)
OR
$17,100 = $10,000 (FVFn, 5%) $10,000 = $17,100 (PVFn, 5%)
FVFn, 5% = 1.71000 PVFn, 5% = .58480
n = 11 years (approximately) n = 11 years (approximately)
5. Joshua Bulong
First payment at year-end (Ordinary Annuity)
i = 6%
FV – OA =
?
€8,000 €8,000 €8,000 €8,000 € 8,000
0 1 2 18 19 20
n = 20
FV – OA = €8,000 (FVF – OA20, 6%)
FV – OA = €8,000 (36.78559)
FV – OA = €294,285
First payment today (Annuity Due)
i = 6%
R= FV – AD =
€8,000 €8,000 €8,000 €8,000 €8,000 ?
0 1 2 18 19 20
n = 20
FV – AD = €8,000 (FVF – OA20, 6%) 1.06
FV – AD = €8,000 (36.78559) 1.06
FV – AD = €311,942
6.Steve Madison
i = 5%
FV – OA =
R=? ? ? ? $250,000
0 1 2 8 9 10
n = 10
$250,000 = R (FVF – OA10, 5%)
$250,000 = R (12.57789)
$250,000 = R R = $19,876
12.57789
7. Jose Garcia
8% annual interest
i = 8%
PV = ? FV = $300,000
0 1 2 3 4 5
n=5
PV = $300,000 (PVF5, 8%)
PV = $300,000 (.68058)
PV = $204,174
8. With quarterly compounding, there will be 20 (5 x 4 ) quarterly compounding
periods, at 1/4 (8 ÷ 4) the interest rate:
PV = $300,000 (PVF20, 2%)
PV = $300,000 (.67297)
PV = $201,891
9. Juan Malaya
i = 5%
FV – OA =
R= $100,000
$9,069 $9,069 $9,069
0 1 2 n
n=?
$100,000 = $9,069 (FVF – OAn, 5%)
$100,000
FVF – OAn, 5% = = 11.02657
$9,069
Therefore, n = 9 years
10. Mark Ariz
First withdrawal at year-end
i = 8%
PV – OA = R =
? £30,000 £30,000 £30,000 £30,000 £30,000
0 1 2 8 9 10
n = 10
PV – OA = £30,000 (PVF – OA10, 8%)
PV – OA = £30,000 (6.71008)
PV – OA = £201,302
First withdrawal immediately
i = 8%
PV – AD =
?
R=
£30,000 £30,000 £30,000 £30,000 £30,000
0 1 2 8 9 10
n = 10
PV – AD = £30,000 (PVF – AD10, 8%)
PV – AD = £30,000 (7.24689)
PV – AD = £217,407
11. Leon Magdalo
i=?
PV = R=
$793.15 $75 $75 $75 $75 $75
0 1 2 10 11 12
n = 12
$793.15 = $75 (PVF – OA12, i)
$793.15
PVF12, i = = 10.57533
$75
Therefore, i = 2% per month or 24% per year.
12. Maria Alvarez
i = 4%
PV =
$300,000 R = ? ? ? ? ?
0 1 2 18 19 20
n = 20
$300,000 = R (PVF – OA20, 4%)
$300,000 = R (13.59033)
R = $22,075
13. Gomez Inc.
i = 6%
R=
$30,000 $30,000 $30,000 $30,000 $30,000
1/1/19 12/31/19 12/31/20 12/31/25 12/31/26 12/31/27
n=8
FV – OA = $30,000 (FVF – OA8, 6%)
FV – OA = $30,000 (9.89747)
FV – OA = $296,924
14. Lilia Diaz
i = 8%
PV – OA = R=
? R$25,000 R$25,000 R$25,000 R$25,000
0 1 2 3 4 5 6 11 12
n=4 n=8
PV – OA = R$25,000 (PVF – OA12–4, 8%) PV – OA = R$25,000 (PVF – OA8, 8%)(PVF4, 8%)
OR
PV – OA = R$25,000 (7.53608 – 3.31213) PV – OA = R$25,000 (5.74664)(.73503)
PV – OA = R$105,599 PV – OA = R$105,599
