Problem 4-1: Compound Interest

To what amount will the following investments accumulate?

a. 4,500 SAR invested for 8 years at 10% compounded annually

b. 10,000 SAR invested for 10 years at 10% compounded annually

c. 8,000 SAR invested for 7 years at 12% compounded annually

d. 20,000 SAR invested for 6 years at 5% compounded annually

Problem 4-2: Future value calculations

You are hoping to purchase a house in the future and recently received an inheritance of 100,000 SAR.

You like to use your inheritance for a down payment for the house.

a. If you use your inheritance in an account that generates 6% returns compounded annually, how many years will it take before your money grows to 750,000SAR?

b. If you let your money grow for 15 years at 8%, how much will you have in your account?

Problem 4-3: Present value calculations

What is the present value of the following future amounts?

a. 15,500 SAR received from 5 years from now at 8%.

b. 105,500 SAR received from 10 years from now at 10%

c. 35,500 SAR received from 15 years from now at 12%.

d. 10,500 SAR received from 8 years from now at 7%.