TIME VALUE OF MONEY SUMS
1. A finance company advertises that it will pay a lumpsum of Rs 8000 at the end of 6 yrs to investors who deposit annually Rs 1000 for 6 yrs. What is the rate implicit in this offer? 2. You want to take a trip to the moon which costs Rs 10,00,000-the cost is expected to remain unchanged in nominal terms. You can save annually Rs 50000 to fulfil this desire. How long will you have to wait if your savings earn an interest of 12 percent p.a.? 3. Suppose a firm borrows Rs 10,00,000 at an interest rate of 15 percent and the loan is repayable in equal instalments at the end of each yr for next 5 yrs. Prepare the loan amortization schedule. 4. Find the present value of Rs 10000 to be received at the end of 4 yrs if discount rate is 12% p.a. and discounting is done quarterly. 5. If you invest Rs 5000 today at a compound interest of 9 % what will be its future value after 75 yrs? 6. What is the present value of Rs 10,00,000 receivable 60 years from now if the discount rate is 10%? 7. A 12 payment annuity of Rs 10000 will begin 8 years hence. The first payment occurs at the end of 8 yrs. What is the present value of this annuity if the discount rate is 14%? 8. Shyam borrows Rs 80000 for a musical system at a monthly interest of 1.25% percent. The loan is to be repaid in 12 equal monthly instalments, payable at the end of each month. What is the monthly instalment? Prepare loan amortization schedule. 9. You can save 2000 a year for 5 yrs and Rs 3000 a year for 10 yrs thereafter. What will these saving cumulate to at the end of 15 yrs, if the rate of interest is 10%? 10. How much should be deposited at the beginning of each year for 10 years in order to provide a sum of Rs 50000 at the end of 10 yrs? Assume interest rate of 12 %.
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