acst?? (1 Viewer)

[lil d]

hey guys jus need sum help?

1)an obligation of 2500 falls due at the end of 7 yrs. Find an equivalent debt at the end of 3 yrs, if the interest rate is 10% p.a. convertible monthly?
This is in the text book..just dunno how to get the answer?? the anwer is 1678.58

2)How long will it take to increase an investment by 83% if interest is at 7.5% p.a.compounded daily?

3) a person borrows $2500 at 11% p.a. convertible quarterly.
if he promises to pay 1000 at the end of the year, 500 at the end of 2 yrs and the balance at the end of 3 yrs what will the final balance be?

thanks guys

 

[CieL]

The first one, you just move 2500 back 4x12 time units... and change your interest rate to monthly... you should get the answer.

But do your tutorial HW... doesnt your tutor give you answers n crap?

 

[buddys]

hey guys jus need sum help?

1)an obligation of 2500 falls due at the end of 7 yrs. Find an equivalent debt at the end of 3 yrs, if the interest rate is 10% p.a. convertible monthly?
This is in the text book..just dunno how to get the answer?? the anwer is 1678.58

2)How long will it take to increase an investment by 83% if interest is at 7.5% p.a.compounded daily?

3) a person borrows $2500 at 11% p.a. convertible quarterly.
if he promises to pay 1000 at the end of the year, 500 at the end of 2 yrs and the balance at the end of 3 yrs what will the final balance be?

thanks guys

How did you go in the test today?

 

[Monstar]

I did the blue test and couldnt do 1 of the questions. Also fucked up the daily/monthly balances thing+ didnt know 1 part of theory.


5-6/10 Wooohooo!

 

[Luke!]

1.
This is easy, man. Just a simple discount on a future value.

The formula is; Present Value = Future Value x (1 + i)^-n
And remember; i = 0.10% p.a./12 months, and n is the time periods, not the years, so n = 48 (4 years each with 12 months).
In this case, n is going to be negative because we are discounting the value back to its present value- that is we are moving back in time.

So... PV = 2500 x (1 + 0.10/12)^-48
PV = 2500 x (1.0083')^-48
PV = 2500 x 0.6714
PV = 1678.58

If we were trying to find the future value instead of the present value, the equation would be FV = PV x (1+i)^n


2.
Alright, put this one in monetary terms... instead of an increase of 83%, think of something like... how long would it take to increase $1000 to $1830?
That way, it becomes obvious what the formula is going to look like...

In this question, i = 0.075% p.a./365 days = 0.000205479

1830 = 1000 x (1.000205479)^n

To find n, first rearrange the equation:

(1.000205479)^n = 1830/1000
(1.000205479)^n = 1.83

Now, to find n by taking the log of both sides...

n x log 1.000205479 = log 1.83
n = log 1.83/log 1.000205479
Hence; n = 2914.31

So it will take 2914.31 days or about 8.058 years.


3.
I'll do this one the long way to make it easier to understand, then the shorter way.

In this case, i = 0.11% p.a./4 quaters = 0.0275% per quarter.

Year 1 Ending Balance:
FV = 2500 x (1.0275)^4
FV = 2768.55

Then he pays $1000 off... so the ending balance becomes $1786.55.

Year 2 Ending Balance:
FV = 1786.55 x (1.0275)^4
FV = 1991.33

Then he pays $500 off, so the ending balance becomes $1491.33.

Year 3 Ending Balance:
FV = 1491.33 x (1.0275)^4
FV = 1662.27

So the final ending balance is $1662.27.

A quicker way to do this is to accumulate the $2500 to 3 years and also accumulate the repayments to 3 years in the same equation. So it would look like this...

FV = [2500 x (1.0275)^12] - [1000 x (1.0275)^8] - [500 x (1.0275)^4) = 1662.27

It's much quicker than finding the balance at each year's end. The trick is to just think of everything from one time period and think about how to accumulate or discount an amount to find its value at that time period.

I hope all this helps. I also hope I haven't made any embarrassing mistakes. Heh.

 

[redruM]

I wanna tap that slut in your sig...NOW

(I just got smashed at uni...._)

 

[Luke!]

I wanna tap that slut in your sig...NOW

*Ahem*...that's my girlfriend, bro.

 

[redruM]

*Ahem*...that's my girlfriend, bro.

lol

I'll just leave it at that.

 

[Luke!]

Haha. Nah, it's cool, bro. You weren't to know.

I'll have to go to one of these Thursday night parties at the Sambar, I've haven't been to one yet.

 

[redruM]

Haha. Nah, it's cool, bro. You weren't to know.

I'll have to go to one of these Thursday night parties at the Sambar, I've haven't been to one yet.

umm...yeah sorry about that mate

Yeah it was a toga party yesterday night...Anyone catch a studly guy at the careers fair at stall number 36?

 

[pocket]

5-6/10 Wooohooo!

in for a shitty mark crew :wave:

 

[Monstar]

fuck yeah.

so glad i've only attended 1 of the elements lectures. I<3 westcott.