You are on page 1of 5

# Q1: Calculate the Future Value of an investment of Rs 15,000 made for five yeaRs if the

Rates
10%
12%
15%
Amounts
24,157.65 26,435.13 30,170.36

Q2: A year ago, you deposited Rs 300,000 into a retirement savings account at a fixed r
account. However, your rate is fixed and cannot be adjusted. How much less could you h
and still have the same amount as you currently will when you retire 38 yeaRs from tod
Deposit Today
300,000.00
Amount @ 5.5%
2,420,846.10
PV @ 6.5%
207,650.26
Savings
92,349.74

Q3: Sixteen yeaRs ago, Miss A invested Rs 100,000. Eight yeaRs ago, Miss T invested 2
240,000. Assume that both Miss A and Miss T continue to earn their respective rates of r
Determine the respective interest rates, and compare them)
Rate @ Miss A
Rate @ Miss T

5.62%
2.31%

Q4: Some time ago, Miss J purchased eleven acres of land costing Rs 369,000. Today, th
the price of the land has been increasing at 10.5% per year?
No. of YeaRs
17.64

## de for five yeaRs if the rate of interest is a) 10% b) 12% c)15%

ngs account at a fixed rate of 5.5%. Today, you could earn a fixed rate of 6.5% on a similar type
w much less could you have deposited last year if you could have earned a fixed rate of 6.5%
etire 38 yeaRs from today?

s ago, Miss T invested 200,000. Today, both Miss A's and Miss T's investments are each worth
heir respective rates of return. Whose investment value was higher one year ago? (Hint:

g Rs 369,000. Today, that land is valued at Rs 2,148,000. How long has she owned this land if

## Q1: Find the EAR in each of the following cases:

Stated Rate (APR)
Number of Times Compounded
9%
Quarterly
18%
Monthly
14%
Daily
11%
Infinite
Q2: Find the APR, or stated rate, in each of the following cases:
Stated Rate (APR)
Number of Times Compounded
11.19%
Semiannually
11.75%
Monthly
9.63%
Weekly
12.93%
Infinite

Q3: First National Bank charges 13.2 percent compounded monthly on its business loans
United Bank charges 13.5 percent compounded semiannually. As a potential borrower, w
bank would you go to for a new loan?
Effectie Rate 1
14.03%
Effectie Rate 2
13.96%

Q4: Barcain Credit Corp. wants to earn an effective annual return on its consumer loans
percent per year. The bank uses daily compounding on its loans. What interest rate is th
bank required by law to report to potential borrowers? Explain why this rate is misleadin
an uninformed borrower.
APR
13.98%

ollowing cases:
Effective Rate (EAR)
9.31%
19.56%
15.02%
11.63%
of the following cases:
Effective Rate (EAR)
11.50%
12.40%
10.10%
13.80%

## pounded monthly on its business loans. First

emiannually. As a potential borrower, which

## e annual return on its consumer loans of 15

ng on its loans. What interest rate is the
ers? Explain why this rate is misleading to

Q1: You want to have \$75,000 in your savings account 12 years from now,
and youre prepared to make equal annual deposits into the account at the
end of each year. If the account pays 6.8 percent interest, what amount
must you deposit each year?
Amount:
4,242.25
Q2: You want to buy a new sports coupe for \$83,500, and the finance office
at the dealership has quoted you a 6.5 percent APR loan for 60 months to
buy the car. What will your monthly payments be? What is the effective
annual rate on this loan?
EMI
1,633.77
EAR
6.70%