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TIME VALUE OF MONEY SOLVED

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1.

2.

Future value of single amount compounded annually under compound interest system.

Future value of single amount compounded more than once in a year under compound interest system.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

Future value of an ordinary annuity.

Future value of an annuity due.

Future value of mixed stream with embedded annuity (ordinary r due).

Present value of single amount compounded annually under compound interest system.

Present value of a single amount compounded more than once in a year under compound interest system.

Present value of a mix stream.

Present value of an ordinary annuity.

Present value of an annuity due.

Present value of mixed stream with embedded annuity (ordinary o due).

Perpetuity.

Loan Amortization schedule.

Effective interest rate.

Interest rate and time period.

Growth rates.

Others

1.

2.

How many concepts are there in the concept of time value of money?

18

On 1-1-2000, Mr. A deposited Rs.1000 in a bank. If bank credits his account @10% per annum

compounding annually, find his balance on 31-12-2004?

FV=1610.51

3.

On 1-1-2000 Mr. A deposited Rs.1000 in a bank. If bank credits his account @10% per annum

compounding semi-annually, find his balance on 31-12-2004?

FV=1628.895

4.

Mr. A deposited Rs.1000 on 1-1-2000 and Rs.2000 on 1-1-2001. Find his balance on 31-12-2002 if bank

credits his account @10% per annum compounded annually?

FV=3751

5.

Mr. A deposited Rs.1000 on 1-1-2000 and Rs.2000 on 1-1-2001. Find his balance on 31-12-2002 if bank

credits his account @10% per annum compounded semi-annually?

FV=3771.108

6.

Mr. A deposited Rs.1000 on 1-1-2000 and Rs.2000 on 1-1-2001 and Rs.1000 on 31-12-2002. Find his

balance on 31-12-2002 if bank credits his account @10% per annum compounded annually?

FV=4851

7.

Mr. A deposited Rs.1000 on 1-1-2000 and Rs.2000 on 1-1-2001 and Rs.1000 on 31-12-2002. Find his

balance on 31-12-2002 if bank credits his account @10% per annum compounded semi- annually?

FV=4873.608

8.

Mr. A deposited Rs.1000 on 1-1-2000 and Rs.1000 on 1-1-2001 and Rs.1000 on 1-1-2002. Find his

balance on 31-12-2002 if bank credits his accounts @ 10% per annum?

FV=3641

9.

Mr. A deposited Rs.1000 on 1-1-2000 and Rs.1000 on 1-1-2001 and rs.1000 on 1-1-2002. Find his balance

on 31-12-2002 if bank credits his accounts @ 10% per annum compounded monthly?

FV=3673.286

10. Mr. A deposited Rs.2000 on 31-12-2000 and Rs.1000 on 31-12-2001 and Rs.1000 on 31-12-2002. Find his

balance on 31-12-2002 if bank credits his accounts @ 10% per annum?

FV=4972

11. Mr. A deposited Rs.1000 on 31-12-2000 and Rs.1000 on 31-12-2001 and Rs.1000 on 31-12-2002 and

Rs.2000 on 31-12-2003. Find his balance on 31-12-2003 if bank credits his accounts @ 10% per annum

compounded annually?

FV=6205.1

12. Mr. A deposited Rs.1000 on 31-12-2000 and Rs.1000 on 31-12-2001 and Rs.1000 on 31-12-2002 and

Rs.2000 on 31-12-2005. Find his balance on 31-12-2006 if bank credits his accounts @ 10% per annum?

FV=7750.788

13. Mr. A deposited Rs.1000 on 31-12-2000 and Rs.1000 on 31-12-2002 and Rs.1000 on 31-12-2004 and

Rs.2000 on 31-12-2006. Find his balance on 31-12-2006 if bank credits his accounts @ 10% per annum

compounded monthly?

FV=7210.837

14. Mr. A deposited Rs.1000 on 1-1-2000 and Rs.2000 on 1-1-2001 and Rs.3000 on 31-12-2005. If banks

credits his account @ 10% per annum compounded annually for the first 2 years and @ 9% compounded

quarterly for the third year onwards. Find his balance on 31-12-2007?

FV=9959.173

15. Mr. A deposited Rs.1000 on 1-1-2000 and Rs.2000 on 1-1-2001 and Rs.3000 on 31-12-2005. If banks

credits his account @ 10% per annum compounded annually till 31-12-2003 while semi-annually for the

remaining life, find his balance on 31-12-2006?

FV=7772.619

16. Mr. A deposited Rs.1000 on 1-1-2000. If bank credits his accounts @ 10% per annum compounding

annually, after how long this deposit will be Rs.1331?

N=3

17. Mr. A deposited Rs.1000 on 1-1-2000. If the balance at the end of the two years is Rs.1210, find his rate of

interest which is compounded annually?

R=10

18. Mr. A deposited Rs.1000 on 1-1-2000. If the balance at the end of the two years is Rs.1210, find his rate of

interest which is compounded semi-annually?

R=4.8809%

19. Mr. A deposited Rs.1000 on 1-1-2000. If the balance at the end of the two years is Rs.1210, find his rate of

interest which is compounded quarterly?

R=?

20. Mr. A purchased a treasury bill that has a face value of Rs.1000, time to maturity of 3 months and market

price of Rs.980. find actual rate of interest that an investor can earn per annum on such investment?

R=?

21. Mr. A intends to receive Rs.2000 at the end of 5 years from now. If bank credits his accounts @10 % per

annum compounded annually, find the principal he should deposit now?

PV=1241.84

22. Mr. A intends to receive Rs.2000 at the end of 5 years from now. If bank credits his accounts @10 % per

annum compounded semi- annually, find the principal he should deposit now?

PV=1227.83

23. Mr. A intends to receive Rs.2000 at the end of 5 years from now. If bank credits his accounts @10 % per

annum compounded quarterly, find the principal he should deposit now?

PV=1220.54

24. On 1-1-2000, Mr. A intends to receive Rs.2000 at the end of a year for 5 years. If bank credits his accounts

@ 10 % per annum compounded annually, find the level of deposit on 1-1-2000?

PV= (ORDINARY ANNUITY)

25. On 1-1-2000, Mr. A intends to receive Rs.2000 at the end of a year for 5 years. If bank credits his accounts

@ 10 % per annum compounded semi- annually, find the level of deposit on 1-1-2000?

PV= (ORDINARY ANNUITY)

26. On 1-1-2000, Mr. A intends to receive Rs.2000 at the end of a year for 5 years. If bank credits his accounts

@ 10 % per annum compounded quarterly, find the level of deposit on 1-1-2000?

PV= (ORDINARY ANNUITY)

27. On 1-1-2000, Mr. A intends to receive Rs.2000 at the start of every year for 5 years. If bank credits his

accounts @ 10 % per annum compounded annually, find the level of deposit on 1-1-2000?

PV=? (ANNUITY DUE)

28. On 1-1-2000, Mr. A intends to receive Rs.2000 at the end of every six months for 5 years. If bank credits

his accounts @ 10 % per annum compounded annually, find the level of deposit on 1-1-2000?

PV=?

29. On 1-1-2000, Mr. A intends to receive Rs.2000 at the end of every six months for 5 years. If bank credits

his accounts @ 10 % per annum compounded semi-annually, find the level of deposit on 1-1-2000?

PV=?

30. On 1-1-2000, Mr. A intends to receive Rs.2000 at the end of every six months for 5 years. If bank credits

his accounts @ 10 % per annum compounded monthly, find the level of deposit on 1-1-2000?

PV=?

31. On 1-1-2000, Mr. A intends to receive Rs.2000 biannually for 3 times. If bank credits his accounts @ 10

% per annum compounded annually, find the level of deposit on 1-1-2000?

PV=?

32. On 1-1-2000, Mr. A intends to receive Rs.2000 biannually for 3 times. If bank credits his accounts @ 10

% per annum compounded semi-annually, find the level of deposit on 1-1-2000?

PV=?

33. On 1-1-2000, Mr. A intends to receive Rs.2000 at the start of every year for 3 years while Rs.3000 at the

end of every year for 4 years. If bank credits his accounts @ 10 % per annum compounded annually, find

the level of deposit on 1-1-2000?

PV=?

34. On 1-1-2000, Mr. A intends to receive Rs.2000 at the start of every year for 3 years while Rs.3000 at the

end of every year for 4 years. If bank credits his accounts @ 10 % per annum compounded annually for 3

years and @ 12 % per annum for remaining life, find the level of deposit on 1-1-2000?

PV=?

35. Mr. A obtained a loan of Rs.100000 from a bank. Bank charges an interest rate of 10 % per annum

compounded annually on outstanding balance. Bank demands 5 equal end of year installments to repay.

Find installments.

LOAN AMORTIZATION SCHEDUALE

36. Mr. A obtained a loan of Rs.100000 from a bank. Bank charges an interest rate of 10 % per annum

compounded semi-annually on outstanding balance. Bank demands 5 equal end of year installments to

repay. Find installments.

LOAN AMORTIZATION SCHEDUALE

37. Mr. A obtained a loan of Rs.100000 from a bank. Bank charges an interest of 40 paisa/day/Rs.1000 on

outstanding balance. Bank demands 5 equal end of year installments to repay. Find installments.

LOAN AMORTIZATION SCHEDUALE

38. Right from 11th year onward from now, Mr. A intends to receive from a bank an amount of Rs.1000 at the

end of every year forever. If bank credits his account @ 10% per annum compounding annually, find

present value of perpetuity?

Perpetuity

39. Right from 11th year onward from now, Mr. A intends to receive from a bank an amount of Rs.1000 at the

end of every year forever. If bank credits his account @ 10% per annum compounding semi- annually,

find present value of perpetuity?

Perpetuity

40. Right from 11th year onward from now, Mr. A intends to receive from a bank an amount of Rs.1000 at the

end of 11th year and Rs.500 in 12th year and similar pattern of receipts forever. If bank credits his account

@ 10% per annum compounding annually, find present value of perpetuity?

Perpetuity

41. Mr. A has no cash but intends to purchase a computer on credit. The cash price of computer is Rs.50000.

two options are available to him i.e. purchase computer on installments and pay him Rs.15000 at the end

of every year for 5 years or get loan of Rs.50000 loan from MCB and pay loan to bank in 5 end of year

equal installments where bank charges interest @ 40 paisa/day/Rs.1000 on outstanding loan? Which

option is better and why?

42. Mr. A intends to receive Rs.2400 at the end of every year from year 6 to 15 from now. Now he has

deposited Rs.5000 at the end of 2 years from now he will deposit Rs.4000. if bank credits his account @

10 % per annum compounding semi annually, how much additional amount he will deposit at the end of

his 4th year so that he shall be able to receive the required amount on desired date?

43. Mr. A intends to receive Rs.2400 at the end of 5 th year, Rs.7000 at the end of 7 th year and Rs.100000 at the

end of 10th year from now. Now he has deposited Rs.500 at the end of 2 years from now he will deposit

Rs.4000. if bank credits his account @ 10 % per annum compounding semi annually, how much

additional amount he will deposit at the end of his 4 th year so that he shall be able to receive the required

amount on desired date?

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