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Today we are going to come up with new task, that is about ” 12 What is the future worth of P600 deposited at the end of every month for…“. We have found the solution to this question, along with interesting information related to it, thanks to its novelty and interest. This will help you to develop a more research-oriented mindset, and make it easier for you to answer these types of questions. This is where we will focus to gain this useful and new knowledge!
Question: “12 What is the future worth of P600 deposited at the end of every month for…”
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12. What is the future worth of P600 deposited at the end of every month for 4 years if the interest rate is 12% compounded quarterly?
13. A young woman 22 years old, has just graduated from college. She accepts a good job and desires to establish her own retirement Fund. At the end of each year thereafter she plans to deposit P2,000 in a fund at 15% annual interest. How old will she be when the fund has an accumulated value of P1.000.000? Ans. 53 years old
14 Mr. Reyes borrows P600 000 at 12% compounded annually agreeing to repay the loan in 15 equal annual payments. How much of the original principal is still unpaid after he has made the 8th payment? Ans P 402,040
Answer: “12 What is the future worth of P600 deposited at the end of every month for…”
12. Formula to compute the future value of an annuity with periodic payment A for T periods, given periodic return r :
= A ( (1+r)T– 1)/r
In this question, the monthly deposit is 600 for 4 years. There are in total 48 deposits. The effective monthly interest rate is:
= (1+12%/4)1/3 – 1 = 0.99%
On applying the formula,
= 600 ( (1+ 0.99%)48 -1 )/0.99% = P36,641.32
13. Given, Future value of annuity = P1,000,000.
Each deposit amount = P2,000
Interest rate = 15%
Let the number of years be “n”
Formula for future value is ( as seen in previous answer)= A( (1+r)n-1)/r
On substitution of these values,
1,000,000 = 2,000( (1+0.15)n-1)/0.15
On solving , n = 31 years approximately (30.9865)
She will be 22+31 = 53 years old
14. we can find the annuity value using the given information,
Formula for present value of annuity = A ( 1- (1+r)-n)/n
Where, present value of annuity = P600,000
A = monthly installment
r= rate if interest = 0.12
n = no.of years = 15 years
On substitution, A = 88,094.54
Then get the P where A = 88 094.54, i=0.12 , n=7 because after 8 payments the remaining payments is 7.
Using the same formula,
P = P402,042.05
A term used in finance to describe how often interest is calculated on loans within a year is called the frequency of compounding. For a given annual percentage, the compounding frequency is higher, which means that the effective annual rate for that loan will be higher.
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