Business Finance

Assignment 01
Time Value of Money

1. If you wish to accumulate Rs 140,000 in 13 years, how much must you deposit today in an account
that pays an annual interest rate of 14%?
2. What will Rs 247,000 grow to be in 9 years if it is invested today in an account with an annual interest
rate of 11%?
3. If you wish to accumulate $197,000 in 5 years, how much must you deposit today in an account that
pays a quoted annual interest rate of 12% with annual compounding of interest? And what if with semi-
annual interest rate?
4. What will Rs 153,000 grow to be in 13 years if it is invested today in an account with a quoted annual
interest rate of 10%?
5. You are offered an annuity that will pay Rs 24,000 per year for 11 years (the first payment will occur
one year from today). If you feel that the appropriate discount rate is 13%, what is the annuity worth to
you today?
6. If you deposit Rs 16,000 per year for 12 years (each deposit is made at the end of each year) in an
account that pays an annual interest rate of 14%, what will your account be worth at the end of 12 years?
7. You plan to borrow Rs 400,000 now and repay it in 5 equal annual instalments. If the annual interest
rate is 14%, how much will your annual payments be? Make amortization table based on equal
instalment and also based on equal principal amount
8. You are offered an annuity that will pay $17,000 per year for 7 years (the first payment will be made
today). If you feel that the appropriate discount rate is 11%, what is the annuity worth to you today?
9. If you deposit Rs 150,000 per year for 9 years (each deposit is made at the beginning of each year)
in an account that pays an annual interest rate of 8%, what will your account be worth at the end of 9
years?
10. You plan to accumulate Rs 450,000 over a period of 12 years by making equal annual deposits in
an account that pays an annual interest rate of 9%. What amount must you deposit each year to reach
your goal?
11. You are valuing an investment that will pay you $12,000 the first year, $14,000 the second year,
$17,000 the third year, $19,000 the fourth year, $23,000 the fifth year, and $29,000 the sixth year (all
payments are at the end of each year). What it the value of the investment to you now is the appropriate
annual discount rate is 11.00%?

Best of Luck