Finance > QUESTIONS & ANSWERS > Foundations of Finance (All)
Financial Mathematics: Solutions to Practice Questions Question One A woman invests $1,000 at 10% p.a compounded annually and plans to hold this investment for five years. How much will she have at ... the end of her holding period? The value of the woman’s investment at the end of her holding period is calculated as: FV =$1, 000(1.10)5 =$1,610.51 Question Two If you wish to provide $20,000 for your newborn’s University education, how much should you invest now, given the interest rate that will accrue on the investment is 10% p.a. compounded monthly? In order to determine how much you should invest now, calculate the present value of $20,000 received 18 years from now, bearing in mind that interest is compounded monthly. PV $20,000 (1+ 12 )12 x18 =$3,330.73 [Show More]
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