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Regn No. MBA-607-QUIZ 1 Name: Date: 21/01/12 Duration 60 Min.

Its and open laptop exam with wireless and lan connections turned off Please turn off your laptops wireless and blue tooth connection before starting the exam Mobile phones and other communication devices are not allowed

! 1. If you put 5,000 in a savings account at the end of each year for 5 years and 6,000 for the next five years then allow the account to compound for an additional 10 years, how much will be in the account at the end of the 20th year? Assume that the account earns 9.25% per year and inflation at 7% Total Amount at the end of the period without inflation__________ (10 Points) Total Amount at the end of the period inflation adjusted__________ (10 Points) 2. What is the value on December 31, 2008 of the following cash flows? (Use a 10% discount/compounding rate). Date Cash Received 01/01/08 01/01/09 01/01/10 01/01/11 01/01/12 Amount 10000 10000 10000 10000 10000

Value on December 31, 2008 is __________(10 Points) 3. How many years will it take for an initial investment of 500 to grow to 844 if it is invested today at 9 percent compounded continuously? No. of years is__________(10 Points) 4. You are planning to retire in 40 years. Currently, the typical house that you plan to purchase costs 3,000,000, but you expect inflation to increase the price of the house at a rate of 6 percent over the next 40 years. In order to buy the house upon retirement, how much must you save each month in equal monthly beginning-of-month deposits if you can earn 10 percent annually? Saving per month is________(20 Points)

5. Recently you borrowed 800,000 to buy a new car and you will pay it back in equal monthly payments which begin today and continue to be payable at the beginning of each month for a total of 5 years. Interest on the loan is 12 percent. What is the amount of the loan payment? Total Amount Paid in 5 years is________(10 Points) Equated Monthly Installment is________(10 Points) ! ! ! !

Regn No. MBA-607-QUIZ 1 Name: Date: 21/01/12 Duration 60 Min. Its and open laptop exam with wireless and lan connections turned off Please turn off your laptops wireless and blue tooth connection before starting the exam Mobile phones and other communication devices are not allowed

! 6. An investment carries a nominal interest rate of 12 percent annually, but interest on the investment is actually compounded quarterly. What is the actual annual percentage yield on the investment? Yield on Investment is ________(10 Points) 7. Assume that you have just won the Reader's Digest sweepstakes and have a choice between three alternative prizes, or options. With option 1, you would receive 1,000,000 now. With option 2, you would receive 7500 per month in perpetuity. With Option 3, you would receive 400,000 now and 900,000 at the end of 10 years. If the appropriate discount rate is 9%, which option should you choose? Your Chosen Option is________(10 Points) 8. Assume that you borrowed 500,000 and plan to repay it in 30 monthly installments of 3000 that are paid at the beginning of each month. What is the annual interest rate you would actually pay on this loan? Annual Interest Rate is________(20 Points) 9. Assume that you purchased a boat for 750,000 and pay 50,000 as down payment and agree to pay the rest over the next seven years in eighty four equal monthly payments that include principal payments plus 12 percent compound interest on the unpaid balance. The payments are paid at the end of the each month. What will be the amount of each payment? Your EMI is________(20 Points) 10. Assume that you have the assignment to examine three investment alternatives, A, B and C. The yearly cash flows from these three investments are as follows: Assuming a 16 percent discount rate, what is the present value of each investment PV of Investment A______,B_______,C_______ (15 Points) A: 33,522; B: 21,638; C: 32,784. A: 43,522; B: 31,638; C: 42,784. A: 53,522; B: 41,638; C: 52,784. A: 63,522; B: 51,638; C: 62,784. ! ! ! ! ! ! ! ! ! !

Regn No. MBA-607-QUIZ 1 Name: Date: 21/01/12 Duration 60 Min. Its and open laptop exam with wireless and lan connections turned off Please turn off your laptops wireless and blue tooth connection before starting the exam Mobile phones and other communication devices are not allowed

! 11. Using the TABLE function in Excel Fill the below table with the difference between the compounding and discounting factors for the specified periods as given in the table? (50 Points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