TVM : Numerical

Example 1: If you deposit $4000 into an account paying 6% annual interest compounded
quarterly, how much money will be in the account after 5 years?
Example 2: If you deposit $6500 into an account paying 8% annual interest compounded
monthly, how much money will be in the account after 7 years?
Example 3: How much money would you need to deposit today at 9% annual interest
compounded monthly to have $12000 in the account after 6 years?
Example 4: If you deposit $5000 into an account paying 6% annual interest compounded
monthly, how long until there is $8000 in the account?
Example 5. At 3% annual interest compounded monthly, how long will it take to double your
money?
Example 6. You can afford Rs 25000 per month for 3 years for a new car. Interest rate is
1.50% month. How much can you borrow?
Example 7. You want to borrow Rs. 2500,000 for a flat. Bank charges @ 12%. You can pay
Rs 500,000 per annum. What will be maturity period of loan?
Example 8. A firm borrows Rs 2500,000 @ 15% that will be repaid in 5 equal instalment at
the end of each year for 5 years. What is the instalment? Prepare an amortization schedule.
Example 9. You deposited Rs. 500,000 on retirement in a bank which pays 10% interest /
annum. How much can you withdraw per annum for 5 years/10 years/ infinite period? (Capital
Recovery Factor)*
Example 10. A FI offer to pay Rs 250,000 for 6 years if you pay Rs 10,00,000 now, What is the
rate of interest offered by the FI?
Example 11. A 12 payment annuity of Rs 15000 will begin 8 years hence. What is the PV of
annuity if discount rate is 14%.
Example 12. You want to go for a world tour after 5 years, that costs Rs 10, 00,000. An NBFC
offers 14% rate of interest. How much will you save annually to finance your tour? (Sinking fund
factor)*

Problem 1: If you deposit $4500 at 5% annual interest compounded quarterly, how much money
will be in the account after 10 years?
Problem 2: If you deposit $4000 into an account paying 9% annual interest compounded
monthly, how long until there is $10000 in the account?
Problem 3: If you deposit $2500 into an account paying 11% annual interest compounded
quarterly, how long until there is $4500 in the account?
Problem 4: How much money would you need to deposit today at 5% annual interest
compounded monthly to have $20000 in the account after 9 years?
Problem 5: If you deposit $6000 into an account paying 6.5% annual interest compounded
quarterly, how long until there is $12600 in the account?
Problem 6: If you deposit $5000 into an account paying 8.25% annual interest compounded
semi-annually, how long until there is $9350 in the account?
Problem 7. Rama limited has obligation to redeem Rs 500 million bonds, 6 years hence. How
much should the company deposit annually in a sinking fund account wherein it earns 14%
interest. (Sinking fund factor)
Problem 8. Your father deposited 1500000 in a bank that pays 10% interest. How much can you
withdraw annually for 10 years? (Capital Recovery Factor)*