SOLUTION: The parents planned for their son to receive Php 50,000 ten years from now. What amount should they invest now if it will earn interest of 12% compounded annually for the first 5 y
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Question 1169915: The parents planned for their son to receive Php 50,000 ten years from now. What amount should they invest now if it will earn interest of 12% compounded annually for the first 5 years and 15% compounded quarterly during the next five years? Please show your solution. Answer by Theo(13342) (Show Source):
first, find the present value of 50,000 invested at 15% compounded quarterly for 5 years.
next take that present value and make it the future value for an additional investment at 12% compounded annually for 5 years.
disregards the negative values.
they're cash flow convention that you don't need for this type of analysis.
your first analysis provides you with a present value of 23,944.62.
that becomes the future value of your second analysis.
your second analysis provides you with a present value of 13,586.82
that should be your answer.
heere are the results of using that calculator.
inputs are in all fields except the present value field.
future value is set to 50,000
number of periods = 5 years * 4 quarters per year = 20
payment amount = 0
interest rate % per time period = 15% / 4 = 3.75
payments at beginning/end of each time period not used.
click on pv to get your answer.
inputs are in all fields except the present value field.
future value is set to present value of the last analysis.
number of periods = 5
payment amount = 0
interest rate % per time period = 12
payments at beginning/end of each time period not used.
click on pv to get your answer.
answer is 13,586.82 is invested today to get 50,000 in 10 years.
