Tasks to be completed in the assignment
- Complete each task on a separate sheet of the Excel file.
- Rename the sheet names as 1, 2, 3, corresponding to the question numbers.
- Rename the Excel file name as Your Name (Please write Your name as it Appears in the Attendance Sheet).
1. If you deposit Rs. 800000 into an account earning 12% interest compounded quarterly, how much would you have in 5 years?
2. How much would you pay for an investment which will be worth Rs. 780,000 in three years? Assume interest is 9%.
3. You have Rs.1000,000 to invest at 8% interest. If you wish to withdraw equal annual payments for 7 years, how much could you withdraw each year and leave Rs.0 in the investment account?
4. If your company borrows Rs. 1300,000 at 7% interest and agrees to repay the loan in 10 equal semiannual payments to include principal plus interest, how much would those payments be?
5. You deposit Rs.17,000 each year for 10 years at 7%. Then you earn 9% after that. If you leave the money invested for another 5 years how much will you have in the 15th year?
6. If you deposit Rs. 90000 in a bank account and then keep on depositing Rs. 14000 each year for the next 12 years, what will be the ending value of these investments if the interest rate is 8%.
7. Arshad Mali has Rs. 42,180.53 in a brokerage account, and he plans to contribute an additional Rs. 5,000 to the account at the end of every year. The brokerage account has an expected annual return of 12 percent. If Arshad’s goal is to accumulate Rs. 250,000 in the account, how many years will it take for Arshad to reach his goal?
8. If you put Rs. 5000 in the stock market, how many years would it take you to triple your money if the market is making 12% a year?
9. If you put Rs. 10 away at the end of each month for the next 40 years at a 12% simple annual interest rate, how much money would you end up with? What if you started at the beginning of each month?
10. If you borrow Rs. 150,000 for a house at 8% simple annual interest rate for 15 years, what is your monthly payment?
11. How long would it take to accumulate Rs. 50,000 if you started putting Rs. 5 in the bank every month starting now at a simple annual interest rate of 7.3%? What if you started at the end of each month?
12. Your parents are planning to retire in 18 years. They currently have Rs. 250,000, and they would like to have Rs. 1,000,000 when they retire. What annual rate of interest would they have to earn on their Rs. 250,000 in order to reach their goal, assuming they save no more money?
13. An investment pays you Rs. 100 at the end of each of the next 3 years. The investment will then pay you Rs. 200 at the end of Year 4, Rs. 300 at the end of Year 5, and Rs. 500 at the end of Year 6. If the interest rate earned on the investment is 8 percent, what is its present value? What is its future value?
14. Washington-Atlantic invests Rs. 4 million to clear a tract of land and to set out some young pine trees. The trees will mature in 10 years, at which time Washington-Atlantic plans to sell the forest at an expected price of Rs. 8 million. What is Washington-Atlantic’s expected rate of return?
15. Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling some securities that call for 4 payments, Rs. 50 at the end of each of the next 3 years, plus a payment of Rs. 1,050 at the end of Year 4. Your friend says she can get you some of these securities at a cost of Rs. 900 each. Your money is now invested in a bank that pays an 8 percent nominal (quoted) interest rate, but with quarterly compounding. You regard the securities as being just as safe, and as liquid, as your bank deposit, so your required effective annual rate of return on the securities is the same as that on your bank deposit. You must calculate the value of the securities to decide whether they are a good investment. What is their present value to you?
16. Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as Rs. 40,000 has today (he realizes that the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then get 24 additional annual payments. Inflation is expected to be 5 percent per year from today forward; he currently has Rs. 100,000 saved up; and he expects to earn a return on his savings of 8 percent per year, annual compounding. To the nearest dollar, how much must he save during each of the next 10 years (with deposits being made at the end of each year) to meet his retirement goal?
17. What is the future value of a 5-year ordinary annuity that promises to pay you Rs. 300 each year? The rate of interest is 7 percent.
18. Find the amount to which Rs. 500 will grow under each of the following conditions: a. 12 percent compounded annually for 5 years. b. 12 percent compounded semiannually for 5 years. c. 12 percent compounded quarterly for 5 years. d. 12 percent compounded monthly for 5 years.
19. Find the present value of Rs. 500 due in the future under each of the following conditions: a. 12 percent nominal rate, semiannual compounding, discounted back 5 years. b. 12 percent nominal rate, quarterly compounding, discounted back 5 years. c. 12 percent nominal rate, monthly compounding, discounted back 1 year.
20. Add 5 questions of different complexity on your own to the assignment.