Question

What will a deposit of RM7,500 left in the bank be worth under the following conditions:

a) Left for nine years at 7% simple interest?

b) Left for six years at 6% compounded semiannually?

c) Left for five years at 8% compounded quarterly?

d) Left for seven years at 12% compounded monthly?

ANS a) RM 12,225 b) RM 10,693.21 c) RM 11,144.61 d) RM 17,300.4

Pls attach the formula used, and explain in detail. Pls do not answer in excel format. Thank you in advance.

Answer 1

a)

Future value = principal + principal * rate * interest

= 7500 + 7500 * 7% * 9

= 12225

Present value = Future value/(1+i)^n

i = interest rate per period

n= number of periods

b)

future value = 7500 * (1+6%/2)^12

= 10693.21

c)

future value = 7500 * (1+8%/4)^20

= 11144.61

d)

future value = 7500 * (1+12%/12)^84

= 17300.4