FINC20018 | Managerial Finance T3 2019 | Assignment 1

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FINC20018 Managerial Finance T3 2019
Assignment 1

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Part A: Calculation
Solution 1:
Given
Compound rate of interest Row 4 5.50%
Amount of Gold stolen from the Spanish in
the sixteenth century Row 1
Compounding Interval
Annuall
y
Value of the British Empire have been at its peak
in 1950
Future value of gold amount
computed through using
compounding formula
Time (1550-1950) (n) 400 Years
Amount of Gold (PV) 0
Interest Rate (i) 5.50% per annum
Formula of Future Value= PV (1+i)n
Value of gold at 1950= Value of gold at 1550(1+5.50%)400
Timeline
Years Y1 Y2 Y3 ..... Y400
Present Value $ -
Rate of interest 5.50% 5.50% 5.50% ..... 5.50%
Future Value
(Baker and Powell, 2012)
Solution 2:
Given Information:
Monthly amount saved by Charlie Hebro every
month Row 14 $
1,150.00
Rate of interest earned on saving account Row 7 1.70% Per annum
Rate of interest is compounded monthly 0.14% Per month
a) Saving if plan is borrowed for 5 years

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Future Value when PMT and rate of interest is given:
PMT= $1,150, n=5*12 = 60 monthly periods, i= 0.14% or 0.0014
Timeline
Months M1 M2 M3 ..... M60
Deposits $ 1,150.00 $ 1,150.00 $ 1,150.00 ..... $ 1,150.00
Rate of interest 0.14% 0.14% 0.14% ..... 0.14%
Future Value $71,928.40
As per formula of FV
FV= PMT∗[(1+i)n−1
i ]
FV= $ 1150∗[ (1+ 0.14 %)60−1
0.14 % ]
FV= $1150*[1.088-1]/(0.14%)
FV=$ 71,928.40
b) If Principal of $50000 has been deposited at the starting of the term deposit and $1150
has been deposited at the end of every month
Future Value when Principal, PMT and rate of interest is given:
Principal: $50000, PMT= $1,150, n=5*12 = 60 monthly periods, i= 0.14% or 0.0014
Timeline
Months M1 M2 M3 ..... M60
Monthly Deposits
$
1,150.00
$
1,150.00
$
1,150.00 ..... $ 1,150.00
Principal Deposit
$
50,000.00
Rate of interest 0.14% 0.14% 0.14% ..... 0.14%
Future Value $126,306.65
(Baker and Powell, 2012)
As per formula of FV