You are on page 1of 1

Future Value of a Single Sum 1.

If u deposit Rs 55,650 in a bank , which was paying a 15% rate of interest of a ten-year time deposit , how much would the deposit grow at the end of ten years . 2. Alpha Ltd has a surplus of Rs. 20 lacs available for the next 5 years. At the end of the period the firm will be needing the amount for investing in its business expansion. If the firm decided to invest the surplus in a scheme that offers a 13% per annum, how much would the amount grow to at the end of 5 years? 3. XYZ banks pays 12 per cent and compounds interest quarterly . If Rs 1000 is deposited initially, how much shall it grow at the end of 5 years. 4. Suppose you have ` 10,00,000 today, and you deposit it in a financial institute, which pays you 8 per cent compound interest annually for a period of 5 years. Show how the deposit would grow. Future Value of Annuity 1.Suppose that a firm deposits Rs 5,000 at the end of each year for four years at 6 per cent rate of interest . How much would this annuity accumulate at the end of the fourth year? 2.An investor is thinking of investing in a recurring deposit scheme that offers an interest rate of 12% per annum. The investment that he is planning is for the higher education of his son who is just two years now. In case the investor decides to invest Rs. 20,000 every year, what will be the total money available to him when his son reaches the age of 20 years? 3. Mr. Bhat deposits each year ` 5000, ` 10000, ` 15000, ` 20000 and ` 25000 in his savings bank account for 5 years at the interest rate of 6 per cent. He wants to know his future value of deposits at the end of 5 years. Present Value of a Single Sum 1.Suppose that an investor wants to find out the present value of Rs 50,000 to be received after 15 years .Her interest rate is 9 per cent . 2. Determine the present value of the cash flows of Rs 3000 at the end of each year for the next 4 years and Rs 7000 and Rs 1000 respectively at the end of years 5 and 6 .The appropriate discount rate is 14 per cent.

Present value of annuity 1.Let us suppose that a person receives an annuity of Rs 5,000 for four years .If the rate of interest is 10 percent .what will be the present value of Rs 5000 annuity. 2. The finance manager of a company wants to buy an asset costing ` 1,00,000 at the end of 10 years. He requests to find out the annual payment required, if his savings earn an interest rate of 12 percent per annum

2.Assuming a discount rate of 12% find out which one of the following gives the highest returns: a. Rs 1,60,000 available today b. Rs 1,75,000 to be received after 8 years c. Rs 25,000 p.a. in perpetuity d. Rs 10,000 per month for a year and Rs 1,00,000 at the end of the year e. Rs 25,000 per year for the next 10 years.