Assignment # 1
1. The following are exercises in future (terminal) values:
a. At the end of three years, how much is an initial deposit of $100 worth, assuming a
compound annual interest rate of (i) 100 percent? (ii) 10 percent? (iii) 0 percent?
b. At the end of five years, how much is an initial $500 deposit followed by five yearend, annual $100 payments worth, assuming a compound annual interest rate of (i)
10 percent? (ii) 5 percent? (iii) 0 percent?
c. At the end of six years, how much is an initial $500 deposit followed by five yearend, annual $100 payments worth, assuming a compound annual interest rate of (i)
10 percent? (ii) 5 percent? (iii) 0 percent?
d. At the end of three years, how much is an initial $100 deposit worth, assuming a
quarterly compounded annual interest rate of (i) 100 percent? (ii) 10 percent?
e. Why do your answers to Part (d) differ from those to Part (a)?
f. At the end of 10 years, how much is a $100 initial deposit worth, assuming an annual
interest rate of 10 percent compounded (i) annually? (ii) semiannually? (iii)
quarterly?(iv) continuously?
2. The following are exercises in present values:
a. $100 at the end of three years is worth how much today, assuming a discount rate
of (i) 100 percent? (ii) 10 percent? (iii) 0 percent?
b. What is the aggregate present value of $500 received at the end of each of the next
three years, assuming a discount rate of (i) 4 percent? (ii) 25 percent?
c. $100 is received at the end of one year, $500 at the end of two years, and $1,000 at
the end of three years. What is the aggregate present value of these receipts,
assuming a discount rate of (i) 4 percent? (ii) 25 percent?
d. $1,000 is to be received at the end of one year, $500 at the end of two years, and
$100 at the end of three years. What is the aggregate present value of these
receipts assuming a discount rate of (i) 4 percent? (ii) 25 percent?
e. Compare your solutions in Part (c) with those in Part (d) and explain the reason for
the differences.
3. Calculate Future value Annuity
a. 2000 paid at the end of each of the next 8 years at the rate of 7%. Calculate the
future value with help of formula and also with table.
b. 4000 paid at the end of each of the next 6 years at the rate of 8%. Calculate the
future value with help of formula and also with table.
c. 7000 paid at the end of each of the next 5 years at the rate of 10%. Calculate the
future value with help of formula and also with table.
d. 9000 paid at the beginning of each of the next 4 years at the rate of 7%. Calculate
the future value with help of formula and also with table.
e. 3000 paid at the beginning of each of the next 7 years at the rate of 12%. Calculate
the future value with help of formula and also with table.
f. 5000 paid at the beginning of each of the next 10 years at the rate of 9%. Calculate
the future value with help of formula and also with table.
4. Calculate Present Value Annuity
a. 4000 received at the end of each of the next 11 years at the rate of 6%. Calculate the
present value with help of formula and also with table.
b. 6500 received at the end of each of the next 7 years at the rate of 7%. Calculate the
present value with help of formula and also with table.
c. 9000 received at the end of each of the next 5 years at the rate of 9%. Calculate the
present value with help of formula and also with table.
d. 1200 received at the Beginning of each of the next 10 years at the rate of 10%.
Calculate the present value with help of formula and also with table.
e. 1500 received at the Beginning of each of the next 4 years at the rate of 9%.
Calculate the present value with help of formula and also with table.
f. 7000 received at the Beginning of each of the next 6 years at the rate of 11%.
Calculate the present value with help of formula and also with table.
Read Instructions Carefully
Note: Submission Date January 8, 2023 Before 11:59PM. The Assignment should be hand
written and submit it in pdf form. Hard form submission is not allowed. Write Course
code, Assignment number, Date, Name and Roll no every paper and also in Email subject
otherwise 0 will be awarded. Use your university email address for Email. Late
submission will not be allowed and no extra time will be given. Send it to my email
address javed.fahad@gift.edu.pk.