Question

Question Three An investor deposits P2,000.00, then withdraws level annual payments starting one year after the deposit was made. Immediately after the 1th annual drawing, the investor has P400.00 left in the account. Calculate the amount of each withdrawal, given that the annual rate of interest is 8% Question Six i.) Assuming a rate of interest of 6 % pa, calculate the present value as at 1 January 2018 of the following annuities, cach with a term of 25 years: (a) an annuity payable annually in advance from 1 January 2019, initally of P3,000.00 pa, and increasing by PS500.00 pa on cach subsequent 1 January (b) an annuity as in ), but only 10 increases are to be made, the annuity then remaining level for the remainder of the term. i. An investor is to receive a special annual annuity for a tem of 10 years in which payments are increased by 5% compound each year to allow for inflation. The first payment is to be P1,000.00 on 1 November 2019. Calculate the accumulated value of the annuity payments as at 31 October 2036 if the investor achieves an effective rate of retum of 4 % per half year

Answer 1

3.

Deposited Amount = P2000.00

Annual Rate of Interest = 8%

Time = 11 years

Calculating Future Value of the deposited Amount and the Annual Payments and the difference between two would be equal to P400.00

So, Let annual payment be x

P400.00 = P2000.00(1.08)¹¹- x(F/A,8%,11)

P400 = P4663.278 - x*16.645

x = P256.13