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    Time Value of Money

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    UBSHimanshu Kumar
    This document contains 15 questions about time value of money concepts including compound interest, present and future value, annuities, loan amortization, and interest rates. Specifically, it asks the reader to calculate future and present values over various time periods using given interest rates, determine doubling periods, calculate interest rates implicit in financial offers, and amortization schedules. It also includes questions about compound annual growth rates and interest rates associated with installment plans.

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    Time Value of Money

    Uploaded by

    UBSHimanshu Kumar
    23 views1 page
    This document contains 15 questions about time value of money concepts including compound interest, present and future value, annuities, loan amortization, and interest rates. Specifically, it asks the reader to calculate future and present values over various time periods using given interest rates, determine doubling periods, calculate interest rates implicit in financial offers, and amortization schedules. It also includes questions about compound annual growth rates and interest rates associated with installment plans.

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    Time value of money

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    This document contains 15 questions about time value of money concepts including compound interest, present and future value, annuities, loan amortization, and interest rates. Specifically, it asks the reader to calculate future and present values over various time periods using given interest rates, determine doubling periods, calculate interest rates implicit in financial offers, and amortization schedules. It also includes questions about compound annual growth rates and interest rates associated with installment plans.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views1 page

    Time Value of Money

    Uploaded by

    UBSHimanshu Kumar
    This document contains 15 questions about time value of money concepts including compound interest, present and future value, annuities, loan amortization, and interest rates. Specifically, it asks the reader to calculate future and present values over various time periods using given interest rates, determine doubling periods, calculate interest rates implicit in financial offers, and amortization schedules. It also includes questions about compound annual growth rates and interest rates associated with installment plans.

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    © All Rights Reserved
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    TIME VALUE OF MONEY

    1. If you invest `5,000 today at a compound interest of 9 per cent, what will be its future
    value after 75 years?
    2. If the interest rate is 12 per cent, what are the doubling periods as per the rule of 72 and
    the rule of 69 respectively?
    3. Fifteen annual payments of `5,000 are made into a deposit account that pays 14 per cent
    interest per year. What is the future value of this annuity at the end of 15 years?
    4. A finance company advertises that it will pay a lump sum of `44,650 at the end of five
    years to investors who deposit annually `6,000 for 5 years. What is the interest rate
    implicit in this offer?
    5. What is the present value of `1,000,000 receivable 60 years from now, if the discount rate
    is 10 per cent?
    6. Mahesh deposits `200,000 in a bank account which pays 10 per cent interest. How much
    can he withdraw (a constant amount) annually for a period of 15 years?
    7. What is the present value of the following cash stream if the discount rate is 14 per cent?
    Year 0 1 2 3 4
    Cash flow 5,000 6,000 8,000 9,000 8,000
    8. Shyam borrows `80,000 for a music system at a monthly interest of 1.25 per cent. The
    loan is to be repaid in 12 equal monthly instalments, payable at the end of each month.
    Prepare the loan amortisation schedule.
    9. Your Father has promised to give you 1,00,000 in cash on your 25 th birthday. Today is
    your 16th birthday. He wants to know two things: (a) If he decides to make annual
    payments into a fund after one year, how much will each have to be if the fund pays 8%.
    (b) If he decides to invest a lump sum in the account after 1 year and let it compound
    annually, how much will the lump sum be?
    10. XYZ bank ltd. pays 12% and compounds interest quarterly. If 1000 is deposited initially
    how much shall it grow at the end of 5 years?
    11. Shyam bought a share at 10, 15 years ago. It is now selling for 27.60. what is the
    compound growth rate in the price of the share?
    12. A company has issued debentures of 50 lakhs to be repaid after 7 years. How much
    should the company invest in sinking fund earning 12% in order to be able to repay
    debentures?
    13. A firm purchases a machinery for 8,00,000 by making a down payment of 1,50,000 and
    remainder in equal installments of 1,50,000 for six years. What is the rate of interest to
    the firm?
    14. You had annual earnings of 45,000 in 2021. By 2028, your annual earnings have grown
    to 67,550. What has been the compound annual rate of growth in your earnings?
    15. You plan to buy a 200 sq. metres of land for 40,000. You would be required to pay
    twenty equal annual installments of 8,213. What compound rate of interest would you be
    paying?

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