UT Balance Discussion

1. What is the balance in an account at the end of 10 years if RM2,500 is deposited today and the account earns 4% interest, compounded annually? And what if it compounded quarterly. Compare your answers.

2. If you deposited RM10 in an account that pay 5% interest, compounded annually, how much will you have at the end of 10 years? 50 years? 100 years (Calculate using mathematical formula)

3. If RM100,000 is deposited and interest is 4% per year, how much would you have at the end of 5 years, if it compounded annually? And what if it is compounded continuously. Compare your answers.

4. Suppose Lizzy wants to have RM500,000 saved by the time she reaches age 30 and suppose Lizzy is 20 years old today. IF she can earn 5% on her funds, how much would she has to invest today to reach her goal? (Calculate by using mathematical formula and using financial table)

5. Suppose Zulaikha wants to be able to withdraw RM5,000 at the end of five years and withdraw RM6,000 at the end of six years, leaving a zero balance in the account after the last withdrawal. If she can earn 5% on her balances, how much must she deposit today to satisfy her withdrawal needs? (Hint – There are two different future values. Calculate by using mathematical formula)

6. Consider an annuity consisting of 3 years at RM2,000 per year. Assume a 4% interest rate. What is the present value of the annuity if the first year occurs:

a) Today (Calculate by using mathematical formula)

b) One year from today (Calculate by using mathematical formula)

7. Calculate the future value of RM500 invested annually at 8% interest compounded semi-annually for 12 years.

8. Suppose Calvin deposits RM100,000 in an account today that pay 6% interest, compounded annually. How long does it take before the balance in the account is RM429,190?