CHAPTER 5 -TIME VALUE OF MONEY

DECEMBER 2015

Answer:
(a)

 (1  i) n  1
FVAND = PMT  (1  i)
 i 

 (1  0.06) 9  1
RM2,500,000 = PMT  (1  0.06)
 0.06 
RM2,500,000 = PMT (12.18)
PMT = RM205,254.51

(b)

 (1  i) n  1
FVAND = PMT  (1  i)
 i 

 (1  0.09) 25  1  (1  0.09) 25  1
RM 6,000  (1  0.09) = PMT  (1  0.09)
 0.09   0.09 
RM6,000(92.32) = PMT (84.70)
PMT = RM6,539.79
SEPTEMBER 2015

Answer:
(a)

 (1  i) n  1
FVAND = PMT  (1  i)
 i 

 (1  0.12) 59  1
FVAND = RM 11,000 (1  0.12)
 0.12 
FVAND = PMT (6670.22) (1.12)
FVAND = RM82,177,052.23

(b)
FV = RM12,000 (1+0.06)^15 = RM28,758.70
PV = RM28,785.70 / (1+0.08)^10 = RM13,320.84
APRIL 2015

Answer:
(a)

 1 
1  (1  0.095 / 12) 36 
PVAND = RM 480  (1  0.095 / 12) = RM15,103.20
 0.095 / 12 
 

 1 
1  (1  0.095 / 12) 36 
PVAN = RM 480  = RM14,984.60
 0.095 / 12 
 

Difference = RM15,103.20 – RM14,984.60 = RM118.63

(b)
Financed by loan = RM2.79m x 85% = RM2.3715m
 1 
1  (1  0.0775 / 12)180 
RM2.3715m = PMT  
 0.0775 / 12 
 

PMT = RM22,322.35
SEPTEMBER 2014

Answer:
(a)

 (1  i) n  1
FVAN = PMT  
 i 

 (1  0.06) 9  1
RM70,000= PMT  
 0.06 
RM70,000 = PMT (11.49)
PMT = RM6,092.25

(b)
PV = RM61,470.78 / (1+0.0525)^30 = RM13,243.59

(c)
For given interest – the longer the time period, the lower the present value.
For given time period – the higher the interest, the smaller the present value.
APRIL 2014

Answer:
(i) Uneven Cash Flows
FV(Y1) = 10,000 (1+0.05)^4 = RM12,155.06
FV(Y2) = 12,000 (1+0.05)^3 = RM13,891.50
FV(Y3) = 11,500 (1+0.05)^2 = RM12,678.75
FV(Y4) = 23,400 (1+0.05)^1 = RM24,570.00
FV(Y5) = 24,000 (1+0.05)^0 = RM24,000.00
Total FV = RM87.295.31
(ii)

 (1  0.05) 5  1
FVAND = RM 15,000 (1  0.05)
 0.05 
FVAND = RM87,028.69

(iii)
FV = PV (1+i)^n
100,000 = 30,000 (1+0.05)^n

 log 3.33 
n=  
 log 1.05 
n = 24.66 years
DECEMBER 2013

Answer:
(a)
 1 
1  (1  0.005)10 
PVAND = RM 100,000  (1  0.005) = RM810,782.17
 0.005 
 

(b) 250(1+0.07)^10 – 250(1+0.05)^10

= RM491.79-RM407.22
= RM84.57
(c) FV(Y3) = 100,000(1+0.0315)^3 = RM109,750.80
FV(Y7) = 109,750.80(1+0.005)^4 = RM111,962.33

(d) FV(Y4) = 800,000(1.08)^3+900,000(1.08)^2+1,000,000(1.08)+1,100,000

= RM4,237,529.60