Fin $415-$ Finance Modelling

Time Value of Money

Assignment

Albert is planning on retiring $12$ years from today. In that day, he would like to have $500,000$ SAR in the Bank.

a$)$ How much money per month does he need to deposit in his savings account to be able to have those $500,000$ SAR, assuming the bank pays $8\%$ interest?

b$)$ Assume now that Albert is able to save $5,000$ SAR every month. How much money will he have in savings account in $12$ years?

Barbara needs to have $300,000$SAR in the bank $5$ years from today, to finance her new a house.

a$)$ How much money does Barbara need to deposit in the Bank today, assuming the bank pays $4\%$ annual interest?

b$)$ If Barbara only deposits today $200,000$ SAR, how much money will she have in the savings account?

Charles has a savings account with a balance, today, of $100,000$ SAR in his investment account. He expects to obtain a yearly return of $12\%$ in his investments. How long will it take for Charles to have $4$ times the balance that he has today in savings account?

Diana deposited $3,500$ SAR into her retirement plan. After $10$ years, Diana has accumulated $840,000$ SAR. What was the average annual interest rate earned over the $10$ years period?