For Mba Level
PROBLEMS CHAPTER 2
1) If you deposit Rs.100 in the bank today and it earns interest at a rate of 8% compounded annually, how much will be in the account 50 years from today?
2) On your birthday, your uncle gave you the money in his savings account. His only deposit was Rs.100 made 50 years ago. The savings account paid 8% compounded annually. How much money is in the account today?
3) A loaf of bread costs Rs.0.79 today. If its price increases by 6% per year, how much will an equivalent loaf cost in 20 years?
4) You ask a friend with some interest factor tables for PVF.09,6. He tells you that the number on his table is 1.677, but the heading of the table is torn off, so he does not know if 1.677 is PVF.09,6 or FVF.09,6. Without looking at another table, can you tell which it is? Why? If it is FVF.09,6, what is PVF.09,6?
5) How much money must you deposit in a savings account today to have Rs.20,000 in 20 years if the interest rate is 8% compounded annually?
6) A stock has paid dividends regularly for the last 20 years, starting with Rs.0.75 in 1964 and rising to Rs.4 in 1984. If these dividends have been growing at a constant rate, what has that rate been for the last 20 years?
7) Your sister borrows Rs.1,000 and promises to repay Rs.2,000. If you want at least a 5% return on your loan, within how many years must she pay you back?
8) Which would you prefer: Rs.1,000 now, Rs.2,000 in 5 years, or Rs.3,000 in 10 years if your time value of money is 12%?
9) Which would you prefer: Rs.3,000 now, Rs.2,000 that was placed in a savings account 5 years ago, or Rs.1,000 that was placed in a savings account 10 years ago if a) your time value of money is 12%. b) your time value of money is 16%. c) your time value of money is 8%.
10) Using a discount rate of 12%, find the present value of Rs.100 received at the end of each of the next four years a) using only the PVF
1) If you deposit Rs.100 in the bank today and it earns interest at a rate of 8% compounded annually, how much will be in the account 50 years from today?
2) On your birthday, your uncle gave you the money in his savings account. His only deposit was Rs.100 made 50 years ago. The savings account paid 8% compounded annually. How much money is in the account today?
3) A loaf of bread costs Rs.0.79 today. If its price increases by 6% per year, how much will an equivalent loaf cost in 20 years?
4) You ask a friend with some interest factor tables for PVF.09,6. He tells you that the number on his table is 1.677, but the heading of the table is torn off, so he does not know if 1.677 is PVF.09,6 or FVF.09,6. Without looking at another table, can you tell which it is? Why? If it is FVF.09,6, what is PVF.09,6?
5) How much money must you deposit in a savings account today to have Rs.20,000 in 20 years if the interest rate is 8% compounded annually?
6) A stock has paid dividends regularly for the last 20 years, starting with Rs.0.75 in 1964 and rising to Rs.4 in 1984. If these dividends have been growing at a constant rate, what has that rate been for the last 20 years?
7) Your sister borrows Rs.1,000 and promises to repay Rs.2,000. If you want at least a 5% return on your loan, within how many years must she pay you back?
8) Which would you prefer: Rs.1,000 now, Rs.2,000 in 5 years, or Rs.3,000 in 10 years if your time value of money is 12%?
9) Which would you prefer: Rs.3,000 now, Rs.2,000 that was placed in a savings account 5 years ago, or Rs.1,000 that was placed in a savings account 10 years ago if a) your time value of money is 12%. b) your time value of money is 16%. c) your time value of money is 8%.
10) Using a discount rate of 12%, find the present value of Rs.100 received at the end of each of the next four years a) using only the PVF