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    Individual Assignment 3

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    Mutiara Nuvi Nafisah
    1) The document contains calculations of accumulated values, interest earned, future values, and present values for various investments over periods of 3, 6, 9, and 10 years with interest rates ranging from 6% to 20%. 2) Higher interest rates result in lower present values, while longer periods before receiving a lump sum payment also reduce present value. 3) For annuity calculations, ordinary annuities have higher future and present values than annuities due at lower interest rates, but the opposite is true at higher interest rates due to the effect of compound interest.

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    Individual Assignment 3

    Uploaded by

    Mutiara Nuvi Nafisah
    53 views2 pages
    1) The document contains calculations of accumulated values, interest earned, future values, and present values for various investments over periods of 3, 6, 9, and 10 years with interest rates ranging from 6% to 20%. 2) Higher interest rates result in lower present values, while longer periods before receiving a lump sum payment also reduce present value. 3) For annuity calculations, ordinary annuities have higher future and present values than annuities due at lower interest rates, but the opposite is true at higher interest rates due to the effect of compound interest.

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    1) The document contains calculations of accumulated values, interest earned, future values, and present values for various investments over periods of 3, 6, 9, and 10 years with interest rates ranging from 6% to 20%. 2) Higher interest rates result in lower present values, while longer periods before receiving a lump sum payment also reduce present value. 3) For annuity calculations, ordinary annuities have higher future and present values than annuities due at lower interest rates, but the opposite is true at higher interest rates due to the effect of compound interest.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    53 views2 pages

    Individual Assignment 3

    Uploaded by

    Mutiara Nuvi Nafisah
    1) The document contains calculations of accumulated values, interest earned, future values, and present values for various investments over periods of 3, 6, 9, and 10 years with interest rates ranging from 6% to 20%. 2) Higher interest rates result in lower present values, while longer periods before receiving a lump sum payment also reduce present value. 3) For annuity calculations, ordinary annuities have higher future and present values than annuities due at lower interest rates, but the opposite is true at higher interest rates due to the effect of compound interest.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Muhammad Elfan Budi Nugroho 29118399 YP60A

    Individual Assignment 3
    P5-5
    A. Find accumulated at the end of 3 years, 6 years, and 9 years.
    Accumulated 3 years $ 1.837,6
    Accumulated 6 years $ 2.251,1
    Accumulated 9 years $ 2.757,7

    B. Calculate the amount of interest earned in the first three years, second three years, and
    third three years.
    Interest First 3 years $ 337,6
    Interest Second 3 years $ 413,5
    interest Third 3 years $ 506,6

    C. Interest earned increases in each succeeding in 3-year period, because each year has
    amount value of principal + interest. From first amount of value, will be principal
    calculation interest for second years. Also, it will be continuing the following year. That
    called interest on interest.
    P5-15
    A. The following rates of return on similar-risk investments during the 10-year period.
    6% $ 558.394,78
    9% $ 422.410,81
    12% $ 321.973,24

    B. Assumption that the $1.000.000 will be received in 15 years.


    6% $ 417.265,06
    9% $ 274.538,04
    12% $ 182.696,26

    C. We know from A that higher interest rate will be resulting lower present value.
    Compared with B, more period will have lower present value. As a receiver the lottery,
    we want to get paid in early time in low interest because $1.000.000 will have higher
    present value.
    P5-21
    A. Future Value of both annuities at the end of year 10 in 10% and 20% interest.
    Future Value Company C Company D
    10% $ 39.843,56 $ 38.568,57
    20% $ 64.896,71 $ 68.530,92
    B. In 10%, Ordinary Annuity (Company C) has greater future value than Annuities Due
    (Company D). In 20%, Annuities Due (Company D) has greater future value than
    Ordinary Annuity (Company C).
    C. Present Value of both annuities, in 10% and 20% interest.
    Present Value Company C Company D
    10% $ -15.361,42 $ -14.869,85
    20% $ -10.481,18 $ -11.068,13
    D. In 10%, Ordinary Annuity (Company C) has greater present value than Annuities Due
    (Company D). In 20%, Annuities Due (Company D) has greater present value than
    Ordinary Annuity (Company C).
    E. For Future Value in 10% interest, Company C has bigger than Company D because
    Company C required higher annual payment. But in 20%, even though Company D has
    fewer annual payment, it has bigger future value than Company C because Company D
    use annuities due term.
    For Present Value in 10% interest, Company C has bigger value than Company D. In
    20%, Company D has bigger value than Company C. From table below, we find
    Company D in 20% interest get highest return.

    Return Company C Company D


    10% 24.482,14 23.698,72
    20% 54.481,18 57.462,79

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