Time Value Lump sum Payments 1. The present value of Rs 4,500 receivable in 7 years at a discount rate of 15% is 1691.72. 2. An amount of Rs 100,000 invested today at 13.0% will grow in 3 years to 144289.7. 3. If you deposit Rs 10,000 today at 12% rate of interest, in how many years does this amount grow to Rs 80,000. 18.34 4. On a contract there are two options Option 1: Receiving Rs 25,000 six years from now. Option 2: Receiving Rs 50,000 twelve years from now. What is the implied discount rate that equates the two amounts? 12.246

5. The money invested in Kissan Vikas Patra today doubles in eight years and six months. What is the approximate rate of interest per annum? 4.1 6. What is the effective rate of interest on an investment with a coupon rate of 12% when compounded a) monthly b) quarterly 12.6825% 12.5509% 7. If the interest rate on a loan is 1.5% per month, the effective annual rate of interest is? 19.5618% 8. An income stream provides Rs 2000 for the first three years and Rs 3000 for the next three years, if the interest rate is 14% then the present value of the income stream is (Note: when not specified in a problem assume that the payments are always at the end of the year) 9344.37 9. If a borrower promises to pay Rs 20,000 eight years from now in return for a loan of Rs 12,550 today, what effective annual interest rate is being offered?

10. Mr Raju has placed a deposit of Rs 5000 with a fund at 15% p.a interest compounded semi annually. In three years the investment will grow to ? 7716.51 11. How much should a company invest now in order to repay debentures (loan) of Rs 2.5 million that will mature at the end of 7 years. The company can earn an interest of 12% on its investment. 1.13 million 12. Determine the present value of cash inflows of Rs 3,000 at the end of each year for the next 4 years, and 7000 and 1,000 respectively at the end of year 5 and 6. The appropriate discount rate is 14% 12832.3

13. Assume that you are given a choice between incurring an immediate outlay of Rs 9,000 and having to pay Rs 2,310 a year for 5 years (first payment due one year from now); the discount rate is 11 percent. What would be your choice? Will your answer change if Rs 2,310 Is paid at the beginning of each year for 5 years? 8537.52(end of the year) 9476.65(beginning of the year)

14. Will your answer change in the above problem, if Rs 2,310 Is paid at the beginning of each year for 5 years.