(TIME VALUE OF MONEY)

QUESTION 3

a) A friend borrows from you RM85,000 now and promises to pay RM201,229 in the future with an interest rate of 9 percent annually. When will your friend pay you? (3 marks)

b) You decide to save to buy a computer at the end of 5 years at a cost of RM5.975.32. You have decided to save 5 equal amounts with the first deposit being made today. How much is your yearly savings if the savings account is offering you 6 percent annually? (3 marks)

c) You expect to receive RM1,000 each at the end of the next three years. You will deposit these payments into an account, which pays 10 percent compounded annually. What is the value at the third year? (4 marks)