354

354) First we calculate Future Value using FV Function in Excel:

=fv(rate,nper,pmt,-pv)

Here,

FV = Amount after 7 years 9 months = ?

Rate = 11.25%/12 = 0.938% compounded monthly

Nper = 7 years 9 months = 7*12 + 9 = 93 months

PMT = 0

PV = 500,000

Substituting the values in formula:

=fv(0.938%,93,0,-500000)

FV or Amount = 1,190,848.73 or 1,190,849

Compound Interest = Amount - PV

= 1,190,849-500,000

Compound Interest = 690,849

So, the correct option is A "P690,849".

355) Computation of Number of Years using Nper Function in Excel:

=nper(rate,pmt,-pv,fv)/2

Here,

Nper = Number of Years = ?

Rate = 24%/2 = 12% compounded semiannually

Pmt = 0

PV = 200,000

FV = 621,170

Substituting the values in formula:

=nper(12%,0,-200000,621170)/2

NPER or Number of Years = 5 years

So, the correct option is B "5 years".

356) For compound interest,

ER =[ (1 + i/n)^n ] - 1

0.0984 = [(1 + i/ n)^n] - 1

Trial and error for n....let n = 4

1.0984 = (1 + 0.095/4)^4

LHS = RHS

Therefore n = 4

Answer: Interest is compounded Quarterly.