Time Value Money Example

TVM Numericals for practice
1. Calculate the FV of a sum of rs 1000/-invested for 3 years. The rate of interest is 10%. ( Ans 1331/- SNM )
2. Calculate the FV ( compounded value ), if rs 1000/- is compounded @ 10% p.a semi-annually for 3 years. ( Ans 1340/-,SNM )
3. Mr investor invests rs 500/- , rs 1000/- and rs 2000/- at the end of each year . Calculate the compound value at the end of 3 years compounded annually when interest is charged at 10% p.a. ( ansrs 3705 /-,SNM )
4. Find the compounded value of annuity when three equal yearly payments of rs 2000/- are deposited into an account that yields 7% . (ans 6430,SNM )
5. Given the interest ( discounting rate ) as 10% you are required to find out the present value of future cash inflows that will be received over next 4 years .
Year cash flows ( rs )
1 1,000
2 2,000
3 3,000
4 4,000 ( ans 7546,SNM )
6. Calculate the PV of annuity of rs 500/- received annually for 4 years, when discounting factor is 10%. (ans 1585,SNM )
7. Find the PV of annuity of rs 3000/- over three years when discounted @ 10 %. ( ans 7461, SNM )
8. If the rate of interest is 16% and compounding is done quarterly , the effective rate of interest will be ? ( 16.98 %, CFAWB 20 /131 )
9. If the interest rate is 1.5 % per month the effective annual rate of interest is ? ( 19.56% CFAWB/19 /126)
10. According to the rule of 69 , doubling period of an investment at an interest of 16% is ? ( ans 4.7 years CFAWB /19 /127 )