EXAM

FIN 422

Problem Solving:
Use the Future Value-Single Sum Formula and show your solutions.

1. I have a certificate of deposit for P500, 000.00. What will its value be in 5 years if the bank pays
me 6% interest compounded once a year?

Note: Use this table only from item no. 2 & 3

Use the following future value of 1 factors for solving the remaining
questions:

2. A deposit of P1, 000.00 on January 1, 2016 will have a future value of P__________ on
December 31, 2020 (or January 1, 2021) if it is invested at 8% per year and the interest is
compounded annually.

3. The interest rate that is necessary for a deposit of P1,000.00 to grow to P5,474.00 after 15 years
of interest compounded annually is __________% per year.