Unit 4 Time Value of money
4.1: Simple interest
SIMPLE
PRINCIPAL RATE TIME PERIOD
INTEREST
R 5 000.00 10% 5 R 2 500.00
R 500.00 12% 8 R 480.00
R 2 000.00 11.00% 6 R 1 320.00
R 850.00 14% 7.5 R 892.50
Calculations:
a= =R5 000 * 0.10 * 5 R 2 500 √
b= =R480/8/0.12 500 √
c= =R1 320/6/R2 000 11% √
d= =R892.50/0.14/R850 7.5 √
4.2: Mr Dlamini 6 marks
Annuity X BGN MODE
FVA due PMT= R 9 000
i= 15%
n= 6
FV= R 90 601 √√
Annuity Y
FVA ordinary
annuity PMT= R 10 000
i= 15%
n= 6
FV= R 87 537 √√
Annuity X is the better choice. It has the highest future value. √√
4.3:MANDLA
Ordinary 2
Option A annuity MARKS
PMT 700
4.1: Simple interest
SIMPLE
PRINCIPAL RATE TIME PERIOD
INTEREST
R 5 000.00 10% 5 R 2 500.00
R 500.00 12% 8 R 480.00
R 2 000.00 11.00% 6 R 1 320.00
R 850.00 14% 7.5 R 892.50
Calculations:
a= =R5 000 * 0.10 * 5 R 2 500 √
b= =R480/8/0.12 500 √
c= =R1 320/6/R2 000 11% √
d= =R892.50/0.14/R850 7.5 √
4.2: Mr Dlamini 6 marks
Annuity X BGN MODE
FVA due PMT= R 9 000
i= 15%
n= 6
FV= R 90 601 √√
Annuity Y
FVA ordinary
annuity PMT= R 10 000
i= 15%
n= 6
FV= R 87 537 √√
Annuity X is the better choice. It has the highest future value. √√
4.3:MANDLA
Ordinary 2
Option A annuity MARKS
PMT 700
