Answer no. 4Show solution decimal places. Use continuous decimal during computation for uniformity offinal answers.1. Assume that on January 1, 2020 Aldous invested Php 100,000 in a financingcompany. Aldous would like to find out what would be the worth of his Php100,000 after 5 years with an interest rate pegged at 8%.2. Assume that on March 1, 2020 Floryn Company is to make annual investment ofPhp 200,000 for four years. The interest for this investment was pegged at 9%.The investment is made every year end. What is the future value of this annuity?3. Pharsa wants to pay equal annual investment amounting to Php 200,000 for 3years. The prevailing interest rate for this investment is 10%. How much is thediscounted value of the three-year payments to be recognized by Pharsa if thefirst payment will be made at the start of the first year?4. Assume that Popol promised to pay Php 100,000 per year in perpetuity, howmuch is the PV of infinite Php 100,000 payments be worth if the interest rate is10%? 15%? 20%?

Time value of money (TVM) refers to the method used to measure the amount of money at different…

Answered: 4. Assume that Popol promised to pay…

4. Assume that Popol promised to pay Php 100,000 per year in perpetuity, how much is the PV of infinite Php 100,000 payments be worth if the interest rate is 10%? 15%? 20%?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.

Question

Answer no. 4

Show solution

decimal places. Use continuous decimal during computation for uniformity of
final answers.
1. Assume that on January 1, 2020 Aldous invested Php 100,000 in a financing
company. Aldous would like to find out what would be the worth of his Php
100,000 after 5 years with an interest rate pegged at 8%.
2. Assume that on March 1, 2020 Floryn Company is to make annual investment of
Php 200,000 for four years. The interest for this investment was pegged at 9%.
The investment is made every year end. What is the future value of this annuity?
3. Pharsa wants to pay equal annual investment amounting to Php 200,000 for 3
years. The prevailing interest rate for this investment is 10%. How much is the
discounted value of the three-year payments to be recognized by Pharsa if the
first payment will be made at the start of the first year?
4. Assume that Popol promised to pay Php 100,000 per year in perpetuity, how
much is the PV of infinite Php 100,000 payments be worth if the interest rate is
10%? 15%? 20%?

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