1. After 4 years, there will be P12,155 in an account with an initial deposit of P10,000 earning 5% annual interest.
2. After 5 years, the future value of P100 at 10% compound interest will be P161.05, and at 10% simple interest will be P150.
3. It would take Microsoft 10 years for its earnings per share to double if its prior 10-year growth rate of 9.47% per year was maintained.
4. If the student saves P5 per day starting at age 18 and invests the annual savings of P1,825 in a mutual fund earning 8% annual return, they can expect to have P826
1. After 4 years, there will be P12,155 in an account with an initial deposit of P10,000 earning 5% annual interest.
2. After 5 years, the future value of P100 at 10% compound interest will be P161.05, and at 10% simple interest will be P150.
3. It would take Microsoft 10 years for its earnings per share to double if its prior 10-year growth rate of 9.47% per year was maintained.
4. If the student saves P5 per day starting at age 18 and invests the annual savings of P1,825 in a mutual fund earning 8% annual return, they can expect to have P826
1. After 4 years, there will be P12,155 in an account with an initial deposit of P10,000 earning 5% annual interest.
2. After 5 years, the future value of P100 at 10% compound interest will be P161.05, and at 10% simple interest will be P150.
3. It would take Microsoft 10 years for its earnings per share to double if its prior 10-year growth rate of 9.47% per year was maintained.
4. If the student saves P5 per day starting at age 18 and invests the annual savings of P1,825 in a mutual fund earning 8% annual return, they can expect to have P826
1. After 4 years, there will be P12,155 in an account with an initial deposit of P10,000 earning 5% annual interest.
2. After 5 years, the future value of P100 at 10% compound interest will be P161.05, and at 10% simple interest will be P150.
3. It would take Microsoft 10 years for its earnings per share to double if its prior 10-year growth rate of 9.47% per year was maintained.
4. If the student saves P5 per day starting at age 18 and invests the annual savings of P1,825 in a mutual fund earning 8% annual return, they can expect to have P826
Score: ______________ Course/Year/Section: BSAIS 1-A Date: February 25, 2021 ACTIVITY NO. 2 1. At the beginning of your freshman year, your favorite aunt and uncle deposits P10,000 into a four-year bank certificate of deposit (CD) that pays 5% annual interest. You will receive the money in the account (including the accumulated interest), if you graduate with honors in four years. How much will there be in the account after four years? *SOLUTION: FV = PV (1 + i)n FV = P10,000 (1 + 0.05)4 FV = P10,000 (1.05)4 FV = P10,000 (1.21550625) FV = P12,155.0625 FV = P12,155 *After 4 years there will be P12,155 in the account. 2. What would the future value of 100 be after 5 years at 10% compound interest? At 10% simple interest? *SOLUTION: Future Value with Compound Interest FV = PV (1 + i)n FV = P100 (1 + 0.10)5 FV = P100 (1.10)5 FV = P100 (1.61051) FV = P161.051 FV = P161.05 *After 5 years, the future value of 100 at 10% compound interest will be P161.05. Future Value with Simple Interest I = Prt FV = PV + I I = (P100) (10%) (5) FV = P100 + P50 I = (P100) (0.5) FV = P150 I = P50 *After 5 years, the future value of 100 at 10% simple interest will be P150. 3. Microsoft’s 2010 earnings per share were 2.0 and its growth rate during the prior 10 years was 9.47% per year. If that growth rate was maintained, how long would it take for Microsoft’s EPS to double? *SOLUTION: FV = PV (1 + i)n FV = 2.0 (1 + 0.0947)10 FV = 2.0 (1.0947)10 FV = 2.0 (2.4714463) FV = 4.9428926 FV = 4.94
*It would take 10 years for the Microsoft to double its EPS. 4. Your grandfather urged you to begin a habit of saving money early in your life. He suggested that you put a P5 a day into an envelope. If you follow his advice, at the end of the year you will have 1,825 (365x5). Your grandfather further suggested that you take that money at the end of the year and invest it in an online brokerage mutual fund account that has an annual expected return of 8%. Today you are 18 years old, if you start following your grandfather’s advice today, and continue saving in this way the rest of your life, how much do you expect to have in the brokerage account when you are 65 years old? *SOLUTION:
(1+𝑖)𝑛 −1 FV = Amount periodically received or paid [ ] 𝑖 (1+0.08)47 −1 FV = P1,825 x [ ] 0.08 (1.08)47 −1 FV = P1,825 x [ ] 0.08 37.2320122−1 FV = P1,825 x [ ] 0.08 36.2320122 FV = P1,825 x [ ] 0.08 FV = P1,825 x 452.9001525 FV = P826,542.7783125 FV = P826,542.78 *The expected amount to have in the brokerage account when I was 65 years old is P826,542.78.
