a$.$You deposit $$1,000$ into your bank account. If the bank pays $4\%$ interest per annum,

how much will you accumulate in your account at the end of $10$th year? $[5$ marks$]$

Expectation: Use formula approach to answer this question and show all the process

of deriving the answer. To verify your answer, you can use Excel sheet or a financial

calculator.

b$.$ You will require $$700$ in $5$ years. If you earn $5\%$ interest on your funds, how much

will you need to invest today in order to reach your savings goal? $[5$ marks$]$

Expectation: Use formula approach to answer this question and show all the process

of deriving the answer. To verify your answer, you can use Excel sheet or a financial

calculator.

c$.$ You deposited $$10,000$ in your back account $5$ year ago and you now noticed that it

has increased to $$20,000.$ What is the implied interest rate provided by your bank? $[5$

marks$]$

Expectation: Use formula approach to answer this question and show all the process

of deriving the answer.

d$.$ What is the present value of a $10-$year ordinary annuity of $$5000$ if the discount rate

is $7\%?[5$ marks$]$

Expectation: Use formula approach to answer this question and show all the process

of deriving the answer. To verify your answer, you can use Excel sheet or a financial

calculator.

e$.$ Consider a $4-$year amortizing loan. You borrow $$10,000$ initially and repay it in $4$

equal annual year$-$end payments and the interest rate is $10\%.$

i$.$ What will be the annual payment? $[2$ marks$]$

$($You can use Excel or financial calculator to find annual payment$)$

ii$.$ Prepare the loan amortization schedule. $[8$ marks$]$

$($Hints: See the example of loan amortization in Table $5\mathrm{.}5)$