A firm takes Rs 2000 deposit into bank which pays 0.

7% pa ,what would be the account balance after one

Bank balance=2000*1.007 2014

Which Annuity is better to receive at 9% pa interest?

Time A1 A2 A3
t1 100 50 150
t2 100 50 150
t3 100 50
t4 50
t5 50
t6 50

PVA $253.13 $224.30 $263.87

account balance after one year.
What would be the Annuity amount for a loan of 15000 at 14% pa for three years
A=15000/PVFA(14,3) 6460

Installment Principal Interest

t0 15000
t1 6460 4360 2100
t2 6460 4970 1490
t3 6460 5666.19 794
14996 4383

Draw a a Loan Amortization schedule

Loan=25000
Time 3years
Interest=10% pa

PV of loan=Annual Installment* PVFA(.10,3)

PVFA= 2.487
Annual Installment=25000/2.487 10052.27
Total payment= 30156.82

Installment Principal Interest

t0 25000
t1 10052.27 7552.27 2500.00
t2 10052.27 8307.50 1744.77
t3 10052.27 9138.25 914.02
Total 24998.02 5158.80

Percentage of interest and principal for every year

Principal Interest Installment
t1 7552.272 2500.000 10052.272
t2 8307.499 1744.773 10052.272
t3 9138.249 914.023 10052.272

Installment
10052.2
10052.2
10052.2
00 at 14% pa for three years
Total amount paid= 19379.845

Balance P

10640
5670
Total amount paid=14996+4383 19379.8449612403

a=

A= 10052.27181 total amoun

Remaining
Principal OR
Reduced
Balance

17447.73
9140.23
1.98 Almost ZERO
30156.82

Principal % Interest %
75.130 24.870
82.643 17.357
90.907 9.093

Principal Interest Balance P

 19379.84

total amount paid 30156.82

Interest is 10% pa

EAR=((1+i/m)^m)-1
Interest calculated yearly
%
EAR 0.1 10

Interest calculated HY

EAR 0.1025 10.25

Interest calculated Quarterly

EAR 0.1038 10.38

Interest calculated monthly

EAR 0.1047 10.47

Interest calculated weekly

EAR 0.1051 10.5

Interest is 12% pa
EAR=((1+i/m)^m)-1

Interest calculated yearly

%
EAR ??

Interest calculated HY

EAR ??

Interest calculated Quarterly

EAR ??

Interest calculated monthly

EAR ??

Interest calculated yearly

%
EAR 0.12 12
Interest calculated HY

EAR 0.1236 12.36

Interest calculated Quarterly

EAR 0.12551 12.55

Interest calculated monthly

EAR 0.12683 12.68

 Frequency
Monthly 12
Quarterly 4
Half yearly 2
Annually 1
Annual interest 0.12
Amount
invested 100
Time period
(years) 5

Payable
(frequency) Present Value

Monthly $55.04
Quarterly $55.37
Half yearly $55.84
Annually $56.74
 Frequency
Monthly 12
Quarterly 4
Half yearly 2
Annually 1
Annual
interest 0.16
Amount
invested 150
Time period
(years) 4
Payable
(frequency) Present Value

Monthly $79.43
Quarterly $80.09
Half yearly $81.04
Annually $82.84
Number of Rate of interest
time periods applicable EAR
60 0.01 0.1268
20 0.03 0.1255
10 0.06 0.1236
5 0.12 0.1200

Future Value

$181.67
$180.61
$179.08
$176.23
 Rate of
Number of interest
time periods applicable EAR
48 0.0133 0.1723
16 0.0400 0.1699
8 0.0800 0.1664
4 0.1600 0.1600
Future Value

$283.27
$280.95
$277.64
$271.60
 ;/ Interest Rate

You are graduating in two years and you start thinking about your future. You know that you will want to buy a house five years after
you graduate and that you will want to put down $60,000. As of right now, you have $8,000 in your savings account. You are also fairly
certain that once you graduate, you can go work in the family business and earn $32,000 a year, with a 5 percent raise every year. You
plan to live with your parents for the first two years after graduation, which will enable you to minimize your expenses and put away
$10,000 each year. The next three years, you will have to live out on your own, as your younger sister will be graduating from college
and has already announced her plan to move back in the family house. Thus, you will only be able to save 13 percent of your annual
salary. Assume that you will be able to invest savings from your salary at 7.2 percent.

What is the interest rate you need to invest the current savings account balance at in order to achieve your goal?

Hint: Draw a timeline that shows all the cash flows for years 0 through 7. Remember, you want to buy a house seven years from now and
your first salary will be in year three. First compute the salary levels and then the amount of money saved each year. Next, calculate the
remaining amount needed to reach the goal. The final step involves solving for the rate of return required for the current savings balance
to grow to the amount calculated in the previous step. Use both time value of money equations and as well as the FV financial function:
FV(rate,nper,pmt,pv,type), the NPV function: NPV(rate,value1,value2, ...), and the RATE function: RATE(nper,pmt,pv,fv,type,guess).
Make sure that all cells are properly formatted.

Starting salary in year 3: $32,000

Annual pay increase: 5.00%
Savings in first 2 years: $10,000
Savings rate for years 3 - 7: 13.00%

Year 1 2 3 4 5 6 7
Salary $0.00 $0.00 $32,000.00 $33,600.00 $35,280.00 $37,044.00 $38,896.20
Savings $0.00 $0.00 $10,000.00 $10,000.00 $4,586.40 $4,815.72 $5,056.51

Investment rate: 7.20%

Future value of savings from salary (equation): $41,015.07

Future value of savings from salary (function): $41,015.07

Target down payment: $60,000.00 $70,000.00

Target shortfall: $18,984.93 $28,984.93
Current savings balance: $8,000.00 15000
Time to achieve target (years): 7 28984=15000*FVFr,7
$1.93 aprrox 10%
Result (equation): 13.1402%
Result (function): 13.1402%
Excel functions:
Present Value PV(rate,nper,pmt,fv,type
Future Value FV(rate,nper,pmt,pv,type

rate=rate on interest in decimals

nper= number of tie periods considering the frequency of compunding/discounting
pmt=payment=annuity amount,zero if a case of lumpsum
PV= Present value of lumpsum,will be zero if a case of annuity
FV= Future value of lumpsum,will be zero if a case of annuity

rate of Number
interest( of time
frequency of p.a=15% periods (
Amount Lumpsum or Annucompounding ) 20 years) present value

160 L 1 0.15 20 $9.78

160 4 0.0375 80 $8.42
160 12 0.0125 240 $8.12
160 52 0.00288 1040 $8.00
160 A 1 0.15 20 $1,001.49
160 4 0.0375 80 $4,042.26
160 12 0.0125 240 $12,150.76
160 52 0.00288 1040 $52,693.19
future value

$2,618.65
$3,042.06
$3,154.48
$3,199.84
$16,390.97
$76,855.05
$239,558.32
$1,053,810.21
5.14 Rule of 72 I=72/t t=72/i i=72/4

5.16 year Cashflow A B

0 Signing Bonus 3100000 4000000
1 Annual Salary 650000 825000
2 Annual Salary 715000 850000
3 Annual Salary 822250 925000
4 Annual Salary 975000 1250000
5 Annual Salary 1100000
6 Annual Salary 1250000
year Present Values
1 $589,569 $748,299
2 $588,232 $699,297
3 $613,576 $690,249
4 $659,918 $846,049
5 $675,305
6 $696,047
0 $3,100,000 $4,000,000

Total PV $6,922,647 $6,983,895

5.13 FV=5500
T= 3 years
rate Frequency EAR
4.20% daily 4.29% 365
4.90% monthly 5.01% 12
5.20% quarterly 5.30% 4
5.40% annually 5.40% 1
 18

C
4250000
550000
625000
800000
900000
1000000

$498,866
$514,189
$596,972
$609,155
$613,913

$4,250,000

$7,083,096