Value & Return Assignment 1. Jai Chand is planning for his retirement.

He is 45 years old today, and would like to have Rs 3,00,000 when he attains the age of 60. He intends to deposit a constant amount of money at 12 per cent at each year in the public provident fund in the State Bank of India to achieve his objective. How much money should Jai Chand invest at the end of each year for the next 15 years to obtain Rs 3,00,000 at the end of that period? 2. You buy a house for Rs 5 lakh and immediately make cash payment of Rs 1 lakh. You finance the balance amount at 12 per cent for 20 years with equal annual installments. How much are the annual installments? How much of the each payment goes towards reducing the principal?...capital recovery problem 3. Mr Sundaram is planning to retire this year. His company can pay him a lump sum retirement payment of Rs 2,00,000 or Rs 25,000 lifetime annuity whichever he chooses. Mr Sundaram is in good health and estimates to live for at least 20 more years. If his interest rate is 12 per cent, which alternative should he choose? 4. XY Company is thinking of creating a sinking fund to retire its Rs 800,000 preference share capital that matures on 31 December 19X8. The company plans to put a fixed amount into the fund at the end of each year for eight years. The first payment will be made on 31 December 19X1, and the last on 31 December 19X8. The company expects that the fund will earn 12 per cent a year. What annual contribution must be made to accumulate to Rs 8,00,000 as of 31 December 19X8? What would be your answer if the annual contribution is made in the beginning of the year, the first payment being made on 31 December 19X0? 5. If a person deposits Rs 1,000 on an account that pays him 10 per cent for the first five years and 13 per cent for the following eight years, what is the annual compound rate of interest for the 13-year period? 6. You want to buy a 285-litre refrigerator of Rs 10,000 on an installment basis. A distributor of various makes of refrigerators is prepared to do so. He states that the payments will be made in four years, interest rate being 13%. The annual payments would be as follows: Rs Principal 10,000 Four years of interest at 13%, i.e., Rs 10,000 0.13 4 5,200 15,200 Annual payments, Rs 15,200/4 3,800 What rate of return the distributor is earning?