Nama : Metta Dina Gloria

NIM : 207007050
Kelas : 48-2 Reguler
Program Studi : Magister Manajemen
Quiz : Time Value of Money
Dosen : DR. Nisrul Irawati, MBA

1. What is the present value of $100 to be received in 3 years if the appropriate interest rate is
10 percent?

→ PV = FV x [1 / (1 + i)n ]
= 100 x [1/(1 + 0,1)3]
= $75,131

2. A bank customer wishes to have an amount of $300 000 at the end of 10 years. The bank
pays an interest rate of 8% per annum, compounded annually. How much money will the
customer have to invest with the bank now?

→ PV0 = FVn / (1 + i)n

= $ 300.000 / (1 + 0,08)10
= $ 138.958

3. The same customer is offered by a different bank an interest rate of 6.5% per annum,
compounded annually. How much money will the customer have to invest with this bank now
to achieve his goal of $300 000 in 10 years’ time?

→ PV = FV x [1 / (1 + i)n ]
= 300000 x [1/(1 + 0,065)10]
= 159.817,8106

4. How much should be invested now into an 8% per annum interest-bearing account,
compounded yearly, so that an amount of $250 000 will be accumulated in 6 years?

→ PV = FV x [1 / (1 + i)n ]
= 250000 x [1/(1 + 0,08)6]
= 157.542,4067

5. The postmaster wants to retire on his 65th birthday with $1.000.000 from an investment he is
about to make in his bank on his 45 th birthday. If the bank pays an interest rate of 6% per
annum, compounded annually, how much must the postmaster invest now?

→ PV = FV x [1 / (1 + i)n ]
= 1000000 x [1/(1 + 0,06)20]
= 311.804,726
6. You are offered an investment with a quoted annual interest rate of 13% with quarterly
compounding of interest. What is your effective annual interest rate?

→ r = (1 + i/n)n - 1
= (1 + 0,13/4)4 - 1
= 13,64%

7. You are offered an annuity that will pay $24000 per year for 11 years (the first payment will
occur one year from today). If you feel that the appropriate discount rate is 13%, what is the
annuity worth to you today?

→ R = $ 24.000
n = 11 tahun
i = 13%
PV = ?

PV = R x 1 – (1 + i)n / i
= $ 24.000 x 1 – (1 + 0,13)11 / 0,13
= $ 136.486,58

8. If you deposit $16000 per year for 12 years (each deposit is made at the end of each year) in
an account that pays an annual interest rate of 14%, what will your account be worth at the end
of 12 years?

(1+𝑖)𝑛 −1
→ FV = PMT [ ]
𝑖
(1,14)12 −1
= 16.000 [ ]
0,14

= 436.331,98

Input 12 14 0 -16.000 CPT

N I/Y PV PMT FV
Output 436.331,98

9. You plan to borrow $389.000 now and repay it in 25 equal annual instalments (payments
will be made at the end of each year). If the annual interest rate is 14%, how much will your
annual payments be?

𝑃𝑉
→ PMT = 1−(1+𝑖)−𝑛
[ ]
𝑖

389.000
= 1−(1,14) −25
[ ]
0,14

= 56.598,88
10. You are offered an annuity that will pay $17.000 per year for 7 years (the first payment will
be made today). If you feel that the appropriate discount rate is 11%, what is the annuity worth
to you today?

1−(1+𝑖)−𝑛 1−(1+0,11)−7
→ 𝑃𝑉 = 𝑃𝑀𝑇 [ ] (1+i)= 17.000 [ ] (1+0,11 )= $88.919,14
𝑖 0,11

n = 7 i/y
= 11 PMT
= 17000 solve for PV (answer = $88.919,14)

Input 7 11% CPT 17.000 0

n i PV PMT FV
Output 88.919,14

11. If you deposit $15000 per year for 9 years (each deposit is made at the beginning of each
year) in an account that pays an annual interest rate of 8%, what will youraccount be worth
at the end of 9 years?

(1+𝑖)𝑛 −1 (1+0,08)9 −1
→𝑓𝑉 𝑑𝑢𝑒 = 𝑃𝑀𝑇 [ ] (1+i) = $15.000[ ](1+0,08) = $202.298,44
𝑖 0,08
n=9
i/y = 8
PMT = 15000
solve for PV (answer = $202.298,44)

Input 9 8% 0 -15.000 CPT

n i PV PMT FV
Output 202.298,44

12. You plan to accumulate $450000 over a period of 12 years by making equal annual deposits
in an account that pays an annual interest rate of 9% (assume all payments will occur at the
beginning of each year). What amount must you deposit each year to reach your goal?

𝐹𝑉 $450.000 $450.000
→ 𝑃𝑀𝑇 = (1+𝑖)𝑛 −1
= (1+0,09)12 −1
= = $20.497,98
[ ] (1+i) [ ](1+0,09) 21,953
𝑖 0,08

n = 12
i/y = 9
FV = 450000
solve for PMT (answer = $20.497,98)

Input 12 9% -450.000 CPT 0

n i PV PMT FV
 Output $ 20,497,98

13. John and Peggy recently bought a house. They financed the house with a $125000, 30-year
mortgage with a nominal interest rate of 7 percent. Mortgage payments are made at the end of
each month. What total dollar amount of their mortgage payments during the first three years
will go towards repayment of principal?

→ First, determine the monthly payment.

t = 360 (30 years times 12 payments per year)
r = 0.5833 (7% annually divided by 12 payment
per year)
PV = 125000 solve for C (answer = $831.6281)

Second, solve for the outstanding principal

after three years.
t = 324
(360 total payments minus 36 payments
made)
r= 0.5833
(7% annually divided by 12 payment per
year)
C = 831.6281
Make sure you are in end mode solve
for PV (answer = $120,908.70)

Principal repaid = starting balance minus current

balance Principal repaid = $125,000 -
$120,908.70 = $4,091.30
Interest paid = total of payments made – principal repaid
Interest paid = (36)($831.6281) - $4,091.30
= $29,938.61 - $4,091.30
= $25,847.31

14. Nico is 30 years old and will retire at age 65. He will receive retirement benefits but the
benefits are not going to be enough to make a comfortable retirement life for him. Nico has
estimated that an additional $25,000 a year over his retirement benefits will him to have a
satisfactory life. How much should Nico deposit today in an account paying 6 percent interest
to meet his goal? Assume Nico will have 15 years of retirement
→ PV of $25000 a year needed in 15 years of retIrement
= Cash flow * [ 1 - (1/(1+r)^n) ] / r
= 25000 * [ 1 - (1 / (1.06)^15) ] / 0.06
= $242.806