Assume on January 1, 2014 you opened a fixed deposit account with a local bank and...
Assume on January 1, 2014 you opened a fixed deposit account with a local bank and between January 1, 2014 and January 1, 2019 you made the following deposits and withdrawals:
|
Date |
Deposits |
Withdrawals |
|
January 1, 2014 |
6,000 |
0 |
|
January 1, 2015 |
4,000 |
0 |
|
January 1, 2016 |
0 |
0 |
|
January 1, 2017 |
0 |
9,000 |
|
January 1, 2018 |
0 |
0 |
|
January 1, 2019 |
3,000 |
0 |
Assume an interest rate of r = 14% compounded annually.
(a) Write down the cash flow stream; (No need to key-in here.)
(b) What is the value in your account at the beginning of year 2020?
(Keep your answer to 2 decimal places, e.g. 987.12)
Homework Answers
(a)
(b)
Interest Rate = 14 % compounded annually
Value of First Deposit on 1st Jan 2020 = 6000 x (1.14)^(2020 - 2014) = $ 13169.84
Value of Second Deposit on 1st Jan 2020 = 4000 x (1.14)^(2020-2015) = $ 7701.66
Value of First Withdrawal on 1st Jan 2020 = -9000 x (1.14)^(2020 - 2017) = - $ 13333.89
Value of Third Deposit on 1st Jan 2020 = 3000 x (1.14)^(2020-2019) = $ 3420
Net Account Value on 1st Jan 2020 = 13169.84 + 7701.66 - 13333.89 + 3420 = $ 10957.6
Final Value of the FIrst Deposit wor
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