(b) What is the accumulated amount if RM 1,400 is invested for 5 years in account...
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(b) What is the accumulated amount if RM 1,400 is invested for 5 years in account that pays, (1) 9% annual simple interest? (ii) 9% interest compounded quarterly? (c) An investment company pays 7% compounded quarterly. What is the effective rate? (3 marks) The Formula Table is Given Below MATHEMATICAL FORMULA Linear Equations (1) (ii) (iii) (iv) (3 marks) (4 marks) y₂-y₁ Slope of a line, m = X₂-X₁ Point-slope form, y - y₁ = m(x-x₁) Slope-intercept form, y=mx+b (where m = slope, b = = y-intercept) General form, Ax+By+C =0 Mathematics for Finance a) Simple Interest Interest, /= Prt (i) Accumulated amount, A = P (1 + rt) Where P = principal, r = interest rate, t = number of years b) Compound Interest (1) (ii) Accumulated amount, A = P(1 + i)" Present value for compound interest, P = 4(1+i)" Where i=, n = mt, and m = number of conversion periods per year m c) Effective Rate of Interest d) Annuities Notations: i and n = mt m (1) Future value of an annuity 1+i)" R[ (1 + )" − 1] S = R = [₁ + #] m Where S = future value of ordinary annuity of n payments of R dollars periodic payment e) Sinking Fund and Amortization Notations: i= and n = mt m (1) Sinking Fund formula Si (1 + i)" - 1 Where R= periodic payment required to accumulate S dollars over n periods R= שר Present value of an annuity - (1 + i)" i P=R Where P = present value of ordinary annuity of n payments of R dollars periodic payment (ii) Amortization formula Pi R 1-(1 + i)™" Where R = periodic payment on a loan of P dollars to be amortized over n periods (b) What is the accumulated amount if RM 1,400 is invested for 5 years in account that pays, (1) 9% annual simple interest? (ii) 9% interest compounded quarterly? (c) An investment company pays 7% compounded quarterly. What is the effective rate? (3 marks) The Formula Table is Given Below MATHEMATICAL FORMULA Linear Equations (1) (ii) (iii) (iv) (3 marks) (4 marks) y₂-y₁ Slope of a line, m = X₂-X₁ Point-slope form, y - y₁ = m(x-x₁) Slope-intercept form, y=mx+b (where m = slope, b = = y-intercept) General form, Ax+By+C =0 Mathematics for Finance a) Simple Interest Interest, /= Prt (i) Accumulated amount, A = P (1 + rt) Where P = principal, r = interest rate, t = number of years b) Compound Interest (1) (ii) Accumulated amount, A = P(1 + i)" Present value for compound interest, P = 4(1+i)" Where i=, n = mt, and m = number of conversion periods per year m c) Effective Rate of Interest d) Annuities Notations: i and n = mt m (1) Future value of an annuity 1+i)" R[ (1 + )" − 1] S = R = [₁ + #] m Where S = future value of ordinary annuity of n payments of R dollars periodic payment e) Sinking Fund and Amortization Notations: i= and n = mt m (1) Sinking Fund formula Si (1 + i)" - 1 Where R= periodic payment required to accumulate S dollars over n periods R= שר Present value of an annuity - (1 + i)" i P=R Where P = present value of ordinary annuity of n payments of R dollars periodic payment (ii) Amortization formula Pi R 1-(1 + i)™" Where R = periodic payment on a loan of P dollars to be amortized over n periods
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Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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