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JRE School of Management

CORPORATE FINANCE

Assignment -1 Date:

Q1. Calculate the present value of Rs 100? Assume a 5 percent time preference rate.

* Received after 1 year from now

* Received at the end of the 4 years.

* Received at the end of the 10 years.

Q2. Assuming a 10 percent discount rate, compute the present value of Rs 1100, Rs 900, Rs 1500 and Rs 700 received at the end of one through four years.

Q3. Determine the present value of Rs 700 each paid at the end of the next six years. Assume an 8percent of interest.

Q4. A bank has offered to you an annuity of Rs 1800 for 10years if you invest Rs 12000 today. What rate of interest do you earn?

Q5. How long it will take to double your money if it grows at 12 per cent annually?

Q6. Mr. Ram is borrowing Rs 50k to buy a low income group house. If he pays equal installment for 25years and 4percent interest on outstanding balance, what is the amount of installment?

Q7. For the above Question, what shall be amount of installment if quarterly payments are required to be made?

Q8. Assume a rate of interest of 10 percent. We have a debt to pay and are given choice of paying Rs 1000 now or some amount X five years from now. What is the maximum amount that X can be for us to be willing to defer payment for five years?

Q9. Compute the present value of a bond that promises to pay interest of Rs 150 a year for thirty years and Rs 1000 at maturity. This first interest payment is paid one year from now. Use a rate of discount at 8per cent.

Q10. You had annual earnings of Rs 45k in year 2011. By 2018 your earnings have grown to Rs 67,550. What has been the compound annual rate of growth in your earnings?

Q11. Find out the present value of an annuity Rs 10000 over 3years when discounted at 5%.

Q12. You are planning to buy a 200 square meters of land for Rs 40000. You will be required to pay twenty equal annual installments of Rs 8,213. What compound will you be paying?

Q13. Using an...