Question One Anuonyam is considering paying GHS 400 into a fund on half-year basis for four...

Question One

Anuonyam is considering paying GHS 400 into a fund on half-year basis for four years starting in one year’s time. The interest earned will be 2% per month. Once all these payments have been made, the investment will be transferred immediately to an account that will earn interest at 15% per annum until maturity. The fund matures in five years’ time after the last payment is made into it. Calculate the terminal value of the fund in 9 years’ time

In 2018, you took a loan of GHS 150,000 to purchase a car. You are going to repay the loan by making five equal payments at the end of each of the next five years. If the interest rate on the loan is 18% per annum compounded annually, Prepare an amortization schedule on the loan

Expert Solution

Terminal value of investment at the end of 9th year is GHS 9,895.63

This calculation is done in two steps, 1st part is calculation of future value when investment is done during the time span of 4 years and then using value at the end of 4th year as investment for the next of 5 year.

Particulars
Invested amount in half yearly basis	400
Years of investment	4
Interest earned each month	2%	During investement period of 4 years
After 4 year fund account will earn	15%
Period of maturity of 4 year	5
Calculate terminal value
During the time of investment
Interest on half yearly basis	12.00%	B4*6
Period	8	B3*2
Amount	400
Value at the end of 4th year	$4,919.88	fv(B9,B10,-B11)

5 year after investment
Rate	15%
Year	5
Present value/ amount invested	$4,919.88
Future value	$9,895.63	fv(B15,B16,,-B17)

Please refer to the attached file for the steps, explanation and calculation along with formula and cell referred.

In next question - of car loan the yearly payment is of GHS4,796.67 which will finsh the loan in 5 years

Loan amount	15000
interest rate	18%
year	5
per year amount to be paid	$4,796.67	pmt(B22,B23,-B21)	pmt(rate, nper,-pv)

year	amount	Interest	fixed amount	Left amount
1	15000	2700	$4,796.67	$12,903.33
Formula	b21	B27*$B$22	B24	B27+C27-D27
2	$12,903.33	$2,322.60	$4,796.67	$10,429.26
3	$10,429.26	$1,877.27	$4,796.67	$7,509.86
4	$7,509.86	$1,351.78	$4,796.67	$4,064.97
5	$4,064.97	$731.70	$4,796.67	$0.00

Please refer to the attached file for the steps, explanation and calculation along with formula and cell referred.

jeff jeffy answered 1 year ago

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