Financial Management-I

Individual Assignment I

TIME VALUE OF MONEY 1. At the time of his retirement Mr.Ojha is given two options: (i) (ii) An annual pension of Rs 20,000 as long as he lives A lump sum payment of Rs 1,50,000.If Mr.Ojha expects to live for 15 years and rate of interest is 15%, which alternative should he select.

2.The money invested in Kisan Vikas Patra today doubles in eight years and six months.What is the rate of interest per annum as per the Rule of 69? 3.If the effective annual rate of interest is 17.87%, then on a debt that has quarterly payments ,what is the nominal annual rate? 4.A finance company advertises that it will pay a lump sum of Rs 10,000 at the end of 6 years to investors who deposit annually Rs 1,000.What interest rate is implicit in this offer? 5.A company borrows Rs 6,00,000 at an interest rate of 15%. The loan is to be repaid in 5 equal annual installments payable at the end of each of the next 5 years. Prepare the loan amortization schedule. 6.Fifteen annual payments of Rs 5,000 are made into a deposit account that pays 14% interest per year. What is the future value of this annuity at the end of 15 years?

Date of submission 21-9-2011