Finance Answers

What kind of factors might affect attitudes towards charging sustainable interest rates by Microfinance Institutions in the Kenyan market environment? How can an MFI/or Deposit Taking Microfinance (DTM) overcome negative attitudes towards such rates? Construct an argument to discuss with someone who holds such attitude in Kenya today

1. If the discounted amount is ₱8500 while the discount rate is 22% then what is the future amount of the money?

2. Compute the annuity of the money which has future worth of ₱50 000 in 5 years if it compounded monthly at the rate of 11%?

3. What is the equivalent effective rate of interest compounded quarterly if the nominal rate is 14.5%?

7.) A businessman is faced with the prospect of fluctuating future budget for the maintenance of the generator. During the first 5 years, P1,000 per year will be budgeted. During the second five years, the annual budget will be P1,500 per year. In addition, P3,500 will be budgeted for an overhaul of the machine at the end of the fourth year and another P3,500 for an overhaul at the end of 8th year. Assuming compound interest at 6% per annum, what is the equivalent annual cost of maintenance?

Ans. P1,888.87

5.) A man deposits P500 at the end of each year and expected to have an amount of P2,769.84 at the end of 5 years.

1. What is the nominal rate of interest if it is compounded annually?

2. What is the nominal rate of interest if it is compounded continuously?

3. Compute the equivalent compound amount factor if it is compounded continuously

Ans. 1. 5.127% 2. 5% 3. 5.3968

8.) The following terms of payment for an annuity are as follows:

Periodic payment = P20,000

Payment interval = 1 month

Interest rate = 18% compounded monthly

Terms = 15 years

1. Find the present worth paid of all the payments if it is paid at the end of each month.

2. Find the difference between the sums of an annuity due and an ordinary annuity on these payments.

3. Find the difference between the present values of an annuity due and an ordinary annuity based on these payments.

Ans. 1. P1,214,911.246 2. P271,687.35 3. P18,628.67

6.) A social worker deposits a uniform amount of P12,000 at the end of each year in order to get a lump sum of money by the time she will retire at the end of 20 years. If the compound amount factor for this annuity is equal to 36.78559.

1. Compute the nominal interest rate.

2. Determine how much will she receive at the end of 20 years.

3. Determine the worth of the sinking fund factor in this fund invested.

Ans. 1. 6% 2. P441,427.08 3. 0.027184557

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