Time Value Of Money
Q. 1 Jim makes a deposit of $12,000 in a bank account. The deposit is to earn interest annually at the rate of 9 percent for seven years. How much will Jim have on deposit at the end of seven years?
Q. 2 Find the present value of $10,000 to be received at the end of 10 periods at 8% per period.
Q.3 What is the value of the following set of cash flows today? The interest rate is 8% for all cash flows. Year Amount 1 Rs. 3000 2 Rs.5000 3 Rs.7000 4 Rs. 10000
Q.4 What is the present value of a 4-year annuity, if the annual interest is 5%, and the annual payment is $1,000?
Q.5 You are given the option of receiving $1,000 now or an annuity of $85 per month for 15 months. Which of the following is correct?
a. You cannot choose between the two without computing present values.
b. You cannot choose between the two without computing future values.
c. You will always choose the lump sum payment.
d. You will always choose the annuity.
e. The choice you would make when comparing the future value of each would be the same as the choice you would make when comparing present values.
Q.6 What is the present value of $5,000 to be received annually at the end of
Years 1 and 2, followed by $6,000 annually at the end of years 3 and 4, and concluding with a final payment of $1,000 at the end of year 5, all discounted at 5 percent?
Q. 7 Find out the future value at the end of five year of an investment of rs.6,000 now and of an investment of Rs.6,000 one year from now at 9% rate of return.
Q.8 Determine the present value of the cash inflows of Rs.3,000 at end of each year for next four years and Rs.7,000 and 1,000 respectively at end of years 5 and 6. The appropriate discount rate is 14%.
Q.9 What is the minimum amount which a person should be ready t o accept today from a debtor who otherwise has to pay a sum of Rs.5,000 today, Rs.6,000, Rs.8,000, Rs.9,000 and Rs.10,000 at end of year 1,2,3,4
Q. 2 Find the present value of $10,000 to be received at the end of 10 periods at 8% per period.
Q.3 What is the value of the following set of cash flows today? The interest rate is 8% for all cash flows. Year Amount 1 Rs. 3000 2 Rs.5000 3 Rs.7000 4 Rs. 10000
Q.4 What is the present value of a 4-year annuity, if the annual interest is 5%, and the annual payment is $1,000?
Q.5 You are given the option of receiving $1,000 now or an annuity of $85 per month for 15 months. Which of the following is correct?
a. You cannot choose between the two without computing present values.
b. You cannot choose between the two without computing future values.
c. You will always choose the lump sum payment.
d. You will always choose the annuity.
e. The choice you would make when comparing the future value of each would be the same as the choice you would make when comparing present values.
Q.6 What is the present value of $5,000 to be received annually at the end of
Years 1 and 2, followed by $6,000 annually at the end of years 3 and 4, and concluding with a final payment of $1,000 at the end of year 5, all discounted at 5 percent?
Q. 7 Find out the future value at the end of five year of an investment of rs.6,000 now and of an investment of Rs.6,000 one year from now at 9% rate of return.
Q.8 Determine the present value of the cash inflows of Rs.3,000 at end of each year for next four years and Rs.7,000 and 1,000 respectively at end of years 5 and 6. The appropriate discount rate is 14%.
Q.9 What is the minimum amount which a person should be ready t o accept today from a debtor who otherwise has to pay a sum of Rs.5,000 today, Rs.6,000, Rs.8,000, Rs.9,000 and Rs.10,000 at end of year 1,2,3,4