PREPARED FOR : PROF. DR. ZORAINI WATI ABAS

ASSIGNMENT 2 : TIME VALUE OF MONEY

GROUP MEMBERS:

•MOHAMAD AFZHAN KHAN•SANTHANA DASS

Short story (accounting people do use technology)

“Tell me and I ' l l forget; show me and I may remember; involve me and I ' l l understand.” (Chinese Proverbs quote)

To Involve you……..

i-LECTURE

EXAMPLE OF I-LECTURE

Prof due to copyright issues, I am unable to upload the i-lecture. Please note.

EVOLUTION OF TECHNOLOGY

SOLVING TVM USING TECHNOLOGY

TO SUPPORT LEARNING

SOFTWARE TO COMPUTE TVM

ENHANCEMENT

URL from YouTube:http://www.youtube.com/watch?v=8JSY4GZ-aSUhttp://www.youtube.com/watch?v=BXm5mZqMp6Y

URL from website:http://www.investopedia.com/articles/03/082703.asp

CONCLUSION

Short story: Don’t draw conclusions until you know all the facts

Thank you

Mohamad Afzhan Khan

TIME VALUE OF MONEY

Investment with Compound Interest

The total amount of money, denoted by S is the compound amount for a sum of money P compounding after n-th year, where the interest is payable k times at the rate of r% per annum, is given by the formula below:

Where: S = compound amount or the prospective value P = initial investment or the principal value r = interest rate per annum k = number of interest paid (compound) in a year n = number of year

1nk

rS P

k = +

Investment with Compound Interest (cont.)

If RM1000 is invested at the rate of 6% per annum, compounding (payable) every quarterly, what would the total amount be in the account after 10 years?

Determine the principal amount of a loan, given that the prospective amount payable after 10 years is RM21,589.20 and the compound rate of 8% per annum, compounding (payable) on yearly basis.

( )( )

( )( )

10 4

40

1

0.061000 1

4

1000 1.015

1000 1.81402

1814.02

nkr

S Pk

S

S

S

S

= +

= + =

==

( ) ( )

( )( )

10 1

10

0.0821589.20 1

1

21589.20 1.08

21589.20 2.15892

21589.20

2.1589210000

P

P

P

P

P

= + =

=

=

=

Question

Self Test:

Determine the present value of an investment worth RM9600 at 5.00% per annum compounding annually for 12 years.