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Practice Questions

Find out the amount which he will have in his account if interest is compounded:Annually Semi-annually Quarterly Continuously y y y y . 1.00.Q.1. An investor deposits Rs.000 in a bank account for 5 years at 8% interest.

Determine the present value of Rs.Q. 500 assuming 5% interest rate for the followings:y Received one year from now y Received at the end of 5th year y Received at the end of 15th year .2.

3.213.000. You will be required to pay twenty equal annual installments of Rs.Q. 8. 40. What compound rate of interest you would be paying? . You are planning to buy a 200 square meters of land for Rs.

Mahesh takes a five year car loan for buying Tata Nano for Rs.Q. 1. Calculate his annual payments and prepare the amortization schedule for loan repayment.00.000 where he has to pay annual payments at a rate of 10%.4. .

1 lakh.000 and immediately make cash payment of Rs.Q. 5.00. How much are the annual installments? How much of the each payment goes towards reducing the principal? .5 You buy a house for Rs. You finance the balance at 12% for 20 years with equal installments.

2.t. to retirement plans:y A lump sum of Rs. Which option should he go for? .6 An executive is retiring.50. He has been given the following option w. assuming the interest rate to be 10%.000 at the retirement y An annuity of Rs.r.000 for next 10 years.Q.00. 20.

000 p. 2. X will retire in next 9 years and from the 10th year he will start receiving the pension of Rs.Q. Calculate the present value of the retirement. . if discount rate 10% is used.a.7 Mr. The pension will continue for 16 years after the retirement.

X is planning for his retirement. He can deposit a sum of money every year which will yield 12% in state bank of India for 15 years.000 after 15 years. 25.00. How much should he deposit each year to have Rs.8 Mr. Currently he is of 45 years and he would like to have Rs.00. .Q.000 when he retires at the age of 60. 25.

9 Suresh wants to determine the sum of money he will have in his savings account at the end of 6 years by depositing Rs.Q. 1.000 each year for the next 6 years. . The annual interest rate is 8%.

Q.10 A finance company advertises that it will pay a lump sum of Rs.000 for 6 years. What interest rate is implicit in this offer? . 1.115 at the end of 6 years to the investors who deposits annually Rs. 8.

and the reduction in the loan balance. the interest payment on the loan. 70. .The interest rate is 8%.Q.000 at the end of each of the next eight years.11 A mortgage requires you to pay Rs. y What is the present value of these payments? y Calculate for each year the loan balance that remains outstanding .

000 today at 8%.Q. how long it will take to double the amount invested? . 10.12 If you deposit Rs.

000.13 A deep discount bond is issued for Rs. What is the implicit rate of interest? .Q. 6553 today and it will mature after 5 years for Rs. 20.

which is the most valuable prize? .000 for each of 10 years If the interest rate is 12%. 19.000 at the end of five years y Rs.000 now y Rs. 1. 11.14 As a winner of a breakfast cereal competition.80.400 a year forever y Rs. you can choose one of the following prizes:y Rs. 1.00.Q.

01.00. The company wants to invest equal amount every year which will earn 12% p.2006 and maturing on 31. 15 XYZ limited is creating a sinking fund to redeem its preference share capital of Rs.2006.a.12. 5.01.000 issued on 01.2017. The annual payments will start on 01.Q. How much is the amount of sinking fund annuity? .

Q.000 6.000 6.000 .000 6. 16 y Calculate the present value at 12% of the following cash flows: Year Cash inflow 1 2 3 4 5 6 7 8 3.000 3.000 6.000 3.000 6.

5 coin for 65 years. 17 Mr.923 worth a year. Daya saved Rs. 76. When he finally decided to cash them in.Q. filling 40 trash cans. If he had deposited the coin saved each year. how much would he have in his account after 65 years of saving? How much more money would this have meant for this ´5 rupee saverµ compared with simply putting his coins into trash can? . the man saved Rs. into a savings account earning 5%. On average. he had roughly 5 million rupees (not the coins) . at the end of the year.

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