Assignment 4: Time value of money workbook answers

Ans 5 PV FV R T
100000 16274 10

PV=Installments * (1+i)n

100000=16274*(1+i)10

6.1447708000492
Ans: 10%

Ans 6 PV of cash inflows in case of scheme A

= (Rs. 2.5 lakh - Rs. 2.5 lakh * 10%) = Rs. 2.25 lakh
PV of cash inflows in case of scheme B
= 18,000 + PVIFA(k,60) *4,100
(Where, k = (1.09)1/12 – 1 = 0.0072 i.e., 0.72%)
1-1/(1.0072)^60/0.072 = 48.581
= 18,000 + 48.581*4,100
= 18,000 + Rs. 19,9182.10 = Rs. 2,17,182.10
Hence, option (c) is the answer.

Ans 8 a. PV = Rs. 100000

b. PV = 200000 * PVIF(14,6)
200000/(1.14)^6 = Rs. 91117

c. PV = 15000/0.14 107142.9

d. PV = (PVIF k,12 * 1000) + (PVIF 14,1 * 95000)

11186 94519
Answer is Rs. 94519

e. PV = (PVIF 14,10* 18000

93888

Ans 10 PV FV R T
1500 23905 ? 10

PV=FV/(1+i)^10

1500=23905/(1+i)10

15.936666666667 10%
Ans. Option A 10%

Ans 19. PV R T
 PV=Installments*1/ 8 Forever
12.5
11875

10 10
9500

Ans. Option C 11875, 9500

Ans 20. PV FV R T
? 4500 15 7

PV=FV/(1+i)^7
1.15
2.6600198804688
1691.7166796539

Ans. Option C. 1692

Ans 26. PV FV R T
650,000 150000 ? 6

The firm pays Rs.1,50,000 out of total cost of Rs.8,00,000 immediately. So the amount Rs.6,50,000 remains outs
Rs.6,50,000 = Rs.1,50,000* PVIFA(r,6y) 4.333333
PVIFA(r,6y) = PVIFA(r,6y) = 4.333
PVIFA(10%,6y) = 4.355
In PVIFA table, value of 4.333 for 6 years is found nearer at 10% column. So, the effective rate of interest is 10%

Ans. Option A 10%

unt Rs.6,50,000 remains outstanding which is paid by way of annuity of Rs.1,50,000 for 6 years.

ective rate of interest is 10% approximately.