Sample Problems Present Value

Question 1

Lina wants to secure her future by saving for a significant purchase. She has set a goal to accumulate ₱500,000 in 5 years for a down payment on a new home. To determine how much she needs to invest today, she considers a prevailing interest rate of 9.5% per year.

What is the present value of the amount Lina needs to invest today to reach her goal of ₱500,000 in 5 years?
How much will be the total interest earnings on her investment over the 5 years?

Question 2

Desired Money (Future Value, FV): P 750,000
Prevailing Rate (r): 8% (0.08)
Period (t): 4 years

Calculations:
1. What is the Present Value (PV)?
2. How much will be the total interest earnings?

Answer 2

1. 551, 250
2. 198,750

Question 3

Desired Money (Future Value, FV): P 1,200,000
Prevailing Rate (r): 10% (0.10)
Period (t): 6 years

Calculations:
1. What is the Present Value (PV)?
2. How much will be the total interest earnings?

Answer 3

1. 676, 800
2. 523, 200

Question 4

Desired Money (Future Value, FV): P 1,000,000
Prevailing Rate (r): 12% (0.12)
Period (t): 8 years

Calculations:
1. What is the Present Value (PV)?
2. How much will be the total interest earnings?

Answer 4

1. 404,000
2. 596,000

Question 5

Desired Money (Future Value, FV): P 2,500,000
Prevailing Rate (r): 11% (0.11)
Period (t): 10 years

Calculations:
1. What is the Present Value (PV)?
2. How much will be the total interest earnings?

Answer 5

1. 880,000
2. 1,620,000