Easy Problem Chapter 5
Untuk memenuhi tugas individu mata kuliah Accounting and Finance
Dosen
Sri Handaru Yuliati, Dra., M.B.A
Disusun oleh
Aliza Safira Salsabilla Purwanto
21/476049/NEK/25481
MAGISTER MANAJEMEN
FAKULTAS EKONOMIKA DAN BISNIS
UNIVERSITAS GADJAH MADA
YOGYAKARTA
2021
1. If you deposite $10,000 in a bank account that pays 10% interest annually, how much will be in
your account after 5 years?
Solutions:
Using excel with the formula: =FV(rate,nper,pmt.pv,type)
With the input: I/YR = 10%
N=5
PMT = 0
PV = -10,000
Type = 0
The future value of the money calculated = $16,105.10
2. What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk
pay 7% annually?
Solutions:
Using excel formula: =PV(rate,nper,pmt,fv,type)
With the input: I/YR = 7%
N = 20
PMT = 0
FV = 5,000
Type = 0
The present value of money calculated = $1,292.10
3. Your parents will retire in 18 years. They currently have $250,000 saved, and they think they will
need $1,000,000 at retirement. What annual interest rate must they earn to reach their goal,
assuming they don’t save any additional funds?
Solutions:
Using excel formula: =RATE(nper,pmt,pv,fv,type,guess)
With the input: N = 18
PMT = 0
PV = -250,000
FV = 1,000,000
Type = 0
The interest rate that will be needed = 8%
4. If you deposit money today in an account that pays 6.5% annual interest, how long will it take to
double your money?
Solutions:
Using excel formula: =NPER(rate,pmt,pv,fv,type)
With the input: I/YR = 6.5%
PMT = 0
PV = -1
FV = 2
The number of years that will be needed to double the money = 11.00674 years
5. You have $42,180.53 in a brokerage account, and you plan to deposite an additional $5,000 at
the end of every future year until your account totals $250,000. You expect to earn 12% annually
on the account. How many years will it take to reach your goal?
Solutions:
Using the excel formula: =NPER(rate,pmt,pv,fv,type)
With the input: I/YR = 12%
PMT = -5,000
PV = -42,180.43
FV = 250,000
The years needed to reach the goal = 11 years
6. What’s the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If this was
an annuity due, what would its future be?
Solutions:
Using the excel foormula: : =FV(rate,nper,pmt.pv,type)
With the input: : I/YR = 7%
N=5
PMT = -300
PV = 0
Type = 0 for ordinary annuity and 1 for annuity due
The future value of money calculated with ordinary annuity = $1,725.22
The future value of money calculated with annuity due = $1,845.99
7. Lin Shan is about to retire and is exploring the possibility of investing a lump sump in an annuity
so that she gets 50% of her last drawn salary at the end of every month for 15 years. She estimates
her las-drawn salary to be ¥60,000. The quotation she obtained from Ping Tan Insurance requires
her to invest a lump sump of ¥1 million. Calculate the return that Lin Shan is earning on her
annuity.
Solutions: SKIPPED (QUESTION INCOMPLETE)
8. An investment will pay $100 at the end of each of the next 3 yers, $200 at the end of year 4, $300
at the end of year 5, and $500 at the end of year 6. If other investments equal risk earn 8%
annually, what’s its present value? Its future value?
Solutions:
Input for excel: CF0 = 0
CF1 = 100
CF2 = 100
CF3 = 100
CF4 = 200
CF5 = 300
CF6 = 500
I/YR = 8%
a. Present value
=NPV(rate, value1, value2, value3, value4, value5, value6)
= $923.98
b. Future value
FV = PV (1+I)n
FV = 923.98 (1+0.08)6
FV = $1,466.24
9. You want to buy a car and a local bank will lend you $20,000. The loan will be fully amortized
over 5 years (60 months), and the nominal interest rate will be 12% with interest paid monthly.
What will be the monthly loan payment? What will be the loan’s EAR?
Solutions:
a. Monthly Loan Payment
Loan amount = 20,000
Interest rate = 12% -> monthly = 0.12/12 = 0.01
Loan period = 60 months
𝛾(1+𝛾𝑛 )
P = L( (1+𝛾)𝑛−1)
0.01(1+0.0160 )
P = 20,000( )
(1+0.01)60 −1
0.01
P = 20,000( 0.8166966986)
P = $244.88895369
b. EAR
EAR = (1 + 𝛾)𝑛 − 1
EAR = (1+0.01)12 −1
EAR = 0.1268250301
EAR = 12.7%
