FM: test

Problem 1
Calculate the future values at 10% interest rates.
(a) Future value of Rs. 12,000 Invested now for a period of four years., (b) The future value at the end of 6
years of an investment of Rs. 110,000 now and of an investment of Rs. 15,000 one year from now., (c)
Future value at the end of 16 years of an annual deposit of Rs. 120,000 at the end of first four years and
withdrawal of Rs. 110,000 per year at the end of year five through eight years. , (d) Future value at the end
of eight years of an annual deposit of Rs. 130,000 at the end of first four years and withdrawal of Rs. 15000
per annum at the end of year 5 through seven.

Problem 2.
Compute the present values of the following using 14% discount rate.
(1) Rs. 13000 immediately, (2) Rs. 15000 after one year, (3) Rs. 16000 after two years, (4) Rs. 14000 after
3 years, (5) Rs. 17000 after 4 years, (6) Rs. 112,000 at the end of each of the next 6 years., (7) Rs.1 8,000
at the beginning of each of the next 3 years.

Problem 3.
Calculate present value of the cash flow of Rs. 24,000 at the beginning of each year for next 5 years and
Rs. 27000 and Rs. 23000 respectively at the end of years 6 and 7. Assume discount rate as 12%.

Probem 4.
At an annual interest rate of 14% if Mr. X received Rs. 25000 for ten years what would be its present value.

Problem 5. Mr. X can pay Rs. 35000 now or some amount after 4 years to Mr. Y. At what amount would the
proposal be beneficial for Mr. Y ?

Problem 6. After 20 years Mr. X will receive a pension of Rs. 50000 p.a. which will continue for the next
sixteen years. Determine the present value of the pension, assuming a discount rate of 12%.

Problem 7. Mr. X borrows a car loan of Rs. 12,50,000 from a bank. The loan requires 10.5% interest and is
to be repaid in 4 years. Prepare a loan amortization schedule.