Question

Select any TWO (2) commercial banks in Malaysia. Based on the current interest rates offered by the banks, calculate the future value of an annuity of RM100,000 made at the beginning of every year for 10 years. Analyse and compare the effect of the interest rates offered by the banks on the total savings

Answer 1

1. AFFIN BANK - Interst on annuity - 2.45%

PMT = 100,000

r = 2.45%

n = 10

FV = (PMT x (1 + r)ⁿ - 1 / i )

= (100,000 x (1.0245)¹⁰ - 1 / 0.0245

= 1,117,771

2. RHB BANK - Interst on annuity - 2.35%

PMT = 100,000

r = 2.35%

n = 10

FV = (PMT x (1 + r)ⁿ - 1 / i )

= (100,000 x (1.0235)¹⁰ - 1 / 0.0245

= 1,112,657