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# TIME VALUE OF MONEY

## Time Value of Money concept can be used to find the followings:

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 mixed stream.

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?