·                 An initial Rs.

500 compounded for 1 year at 6%

·                 An initial Rs. 500 compounded for 2 years at 6%
·                 The present value of Rs. 500 due in 1 year at a discount rate of 6%
·                 The present value of Rs. 500 due in 2 years at a discount rate of 6%

4 i. PV = 500
FV = 500*1.06 530

PV = 500
FV = 500*1.1236 561.8

FV=500 PV= FV/(1+r)^n

PV=500*0.9434 471.7

FV= 500
PV = 500*0.8900 445

7.               Find the present values of these ordinary annuities, discounting occurs once in a year
·                 Rs. 400 per year for 10 years at 10%
·                 Rs. 200 per year for 5 years at 5 % amounts received at the
·                 Rs. 400 per year for 5 years at 0% Amounts received at the
·                 Rework the above parts assuming they are annuities due

i. FV = 400
PV = 400*6.1446 2457.84

ii PV = 200*4.3295 865.9

iii. FV = 400*5 2000

amounts received at the end of each year = Ordinary Annuity
Amounts received at the beginning of each year = Annuity Due