Time Value of Money

1. Mr. Shyam who deposited Rs. 1000 in a Savings Bank a/c at 3 per cent simple rate of interest
and he wants to know the total amount receivable after a period of 5 years.
2. Suppose if you deposit Rs. 10,000 today in a financial institute at 6 per cent compound interest
for a period of 5 years, what is the compound value?
3. A person has deposited Rs. 28,000 with a bank that advertises it pays 6 per cent interest half-
yearly. Calculate what the amount is after 3 years.
4. Mr. A wishes to determine the growth rate on the following stream of dividends, which has
received for a period of 6 years from his company.
Year 2008 2009 2010 2011 2012 2013
Dividend per share
(Rs.)
1.90 1.10 1.40 1.30 1.80 2.10
5. Suppose you deposit each year starting Rs. 750, Rs. 1,000, Rs. 1,250. Rs. 1,500 and Rs. 1,750 in
your savings bank account 1 to 5 years respectively. What are your deposits compound value at
the end of 5 years, interest rate is 6,per cent?
6. Mr. Y deposited at the end of each year Rs. 500. Rs.900. Rs. 1400. Rs.1900. R
s
. 2400, in the
savings bank account for 5 years 1 to 5 respectively. Calculate his future value of series of
deposits if the bank pay 5 per cent compound rate of interest.
7. An employee of AIMS deposits at the end of each year Rs.30, 000 in his PPF account for 20
years. What will be the accumulated amount in his PPF at the end of 20 years at 9 per cent
interest rate?
8. Mr. A deposits Rs.560 at the beginning g of each year for 10 years in his savings bank account
and the deposit earns a compound interest of 5 per cent. Calculate how much money he will have
at the end of 10 years.
9. If you deposit Rs. 50,000 today in a financial institute at the rate of 8 per cent in how many
(roughly) yean will this double using (a) rule 72 and (b) rule 69.
10. Miss Kala deposited Rs.5000 in a bank which pays 8% quarterly compound interest. What is her
effective rate of interest?
11. Find the present value of Rs.100000 receivable after 10 years if the discount rate is 10%.
12. Find the present value of an income stream which provides Rs.500, Rs.1000, Rs.1500, Rs.2000
and Rs.2500 at the end of 1,2,3,4 and 5 years respectively if the interest rate is 12%.
13. Mr. A has to receive Rs.2500 per year for 5 years. Calculate the PV of annuity if he can earn 10%
interest on investment.
14. A financial manager of a company wants to pay a debt of Rs. 2.00.000 at the end of 5 years. He requests
to find out the annual payment required, if his savings earn an interest rate of 10 per cent per annum.
15. A house owner has rented out his house (a partition) for 3 years at a rent of Rs. 4.000 with stipulation that rent
will increase by 5 per cent every year. If the owner required rate of returns is 8 per cent, what is the PV of
expected (annuity) rent.