LECTURE 07

Question#1

If interest rate is 11% compounded quarterly and the number of payments is 24, then calculate
the Accumulation Factor?

Solution:

Here we have

Interest Rate = 11% compounded quarterly (quarterly means each of 4 equal parts into which
something is divided)

Interest Rate = i = (11/4) % = 0.0275.

Number of payments = n = 24.

((1  i) n )  1
Accumulation factor =
i

= 33.36822.

Question#2

If you deposit Rs.15, 000 at the end of each month into an account with earning rate 7%, how
much will you have after 12 years?

Solution:

Amount of annuity = C = 15,000

Rate of interest = i = 0.07/12=0.0058333333

Number of periods = n = 12*12=144

So, Future value is

  1  i n  1 
= C 
 i 

 1  0.005833333144  1
= 15000  
 0.005833333 

 2.310720634  1
= 15000 
 0.005833333 

= 3370424.679 Rs

Question#3

If you deposit Rs.13, 000 at the rate 13% and no. of payment is 22 then find present value or
discounted value?

Solution:

1  1  i  n 
Present value or Deposited value = C  
 i 

= 93203.7 Rs

Question#4

If you deposit Rs.20000 at the end of each month into an account with earning rate 5%, how
much will you have after 10 years?

Solution: 3105645.340 Rs

Question#5

Sum of two numbers is 17 & the difference b/w their squares is 85. Find the difference b/w the numbers.
Solution:
Difference = 5

LECTURE 08

Question#6 A home mortgage loan of Rs 125,000 is taken for 30 years with monthly payment. If
the interest rate is 9% per annum, then calculate total interest paid in the second year of the
payments. (Payments are made at the end of each month)

Question#7

What does this function do? =CUMIPMT (0.09/12, 9*12, 30000, 1, 9, 0)

Solution: It returns the cumulative interest paid on a loan for first nine months where the interest
rate is 9% and year of loan is 12 and loan is 30000.

Question #8

Suppose that you establish an IRA (Individual Retirement Account) at age 50 and you will retire
after 15years hence at age 65. You plan to make annual payments of Rs1200 into the IRA at the
beginning of each year. If you assume a rate of return of 9.5 percent a year, calculate the future
value of your IRA when you will retire at age 65.

Solution: =FV (9.5%, 15,–1200, 0, 1)

Writing this formula is all enough as you are not using excel but just applying formula for the
required purpose.

Question#9

What tasks do the following Excel functions perform?

 CUMPRINC
 IPMT
  PPMT
 NPER
 CUMIPMT

Question#10

Calculate the Interest Rate per period of an annuity in MS-Excel for the following data:

Data Description
4 Years of loan
-500 Monthly Payment
10000 Amount of Loan

LECTURE 09

Question#11

A college library has 500 English novels, 800 Urdu Novels, 200 Urdu short stories and 450
English short stories. Write this data in matrix form.

Solution:

 800 500 
 
 200 450 

Question#12

Write a row matrix and column matrix. Also write a square matrix of order 6.
Hint: Row matrices have only one row.
Column matrices have only one column.

Question#13
Write down the identity matrix of order 3.

Question#14

Find the Multiplicative Inverse of

4 3
A= 
3 2 

And show that A-1A = I

Question#15

Show that I 2 * B  B * I 2

 5 1
B=  
6 2 