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August 9th, 2014, 06:00 AM   #1
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Another Question about Compound Interest

Starting from May, $\displaystyle 1^{st}$ 2012 and so on in the early days of the month, Jaya Abadi company will give donation to an orphanage as much as 3,600,000.00 IDR. The orphanage wants the donation to be received at once in May, $\displaystyle 1^{st}$ 2012, and the bank agrees and gives 6% of compound interest per year. The amount of money received is:
A. 56,400,000.00 IDR
B. 59,784,000.00 IDR
C. 60,000,000.00 IDR
D. 60,216,000.00 IDR
E. 63,600,000.00 IDR

Is it possible to get that much in one day (notice there's no change of date)? Or did they just make a typo?
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August 9th, 2014, 03:09 PM   #2
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Perpetuity problem.
Answer is C.
3,600,000/.06
Google it up. Wiki it up.
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August 9th, 2014, 08:06 PM   #3
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OK, thanks for your help.
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August 9th, 2014, 08:31 PM   #4
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Wait, I Googled it up and encountered this page:
https://www0.gsb.columbia.edu/premba...ce/s5/s5_4.cfm

Then I got confused. Is the one applied here the Present Value of No-Growth Perpetuities or Present Value of a Perpetuity Due. I couldn't digest which one fit more to the question, not to mention that someone else I asked answered E instead, which means that he assumed that it is Present Value of a Perpetuity Due. Your answer means that you assumed it is Present Value of No-Growth Perpetuities. Which one is correct?
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August 10th, 2014, 04:27 AM   #5
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Quote:
Originally Posted by Monox D. I-Fly View Post
Wait, I Googled it up and encountered this page:
https://www0.gsb.columbia.edu/premba...ce/s5/s5_4.cfm

Then I got confused. Is the one applied here the Present Value of No-Growth Perpetuities or Present Value of a Perpetuity Due. I couldn't digest which one fit more to the question, not to mention that someone else I asked answered E instead, which means that he assumed that it is Present Value of a Perpetuity Due. Your answer means that you assumed it is Present Value of No-Growth Perpetuities. Which one is correct?
Good call. My bad. I guess I wasn't drunk enough.
Your friend is right. It is inded a case of the "Present Value of a Perpetuity Due".
Accordingly, we'd have 3600000+3600000/.06
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August 10th, 2014, 06:41 AM   #6
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That's good. Glad finally I can confirm it before I go to the office again. Thanks for the confirmation.
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August 10th, 2014, 06:52 AM   #7
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By the way, what currency is IDR?
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August 10th, 2014, 02:28 PM   #8
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IDR is short for "Indonesian Rupiah". Rupiah is the currency used in Indonesia, my country. Though I wrote 63,600,000.00 IDR, for example, our country's writing format is Rp 63.600.000,00 instead.
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