(1)-PROBLEM - A firm borrows P 1,000 for 8 years. How much must it repay in a lump sum at the end of the 8th year? At 10% interest.

SOLUTIONS

CASH FLOW DIAGRAM : Compound Interest Future Value

PV = P1,000 i = 10%

1 > > > > > > > > 8

FV = ?

FORMULA BASE SOLUTION :

FV = PV (1 + i )n

(1 + i) 8 = 2.1436 1.18 = 2.1436

= P 1,000 (2.1436)

FV = P 2,143.60

CALCULATOR BASE EL-733A SOLUTION FIN MODE

FV = P 2,143.59

MS EXCEL 2007 BASE SOLUTION =FV(B3,B2,0,-B1) and then press Enter.

Present Value 1000

Years, n 8

Annual Rate, i 0.1

Future Value P 2,143.59

2ndF CA 2ndF TAB

8 [ n ] 10 [ i ] 1000 [PV] COMP[FV]