TIME VALUE OF MONEY1. A company's bonds have par value of Rs. 1,000, mature in 7 years, and carry a coupon rate of 12% payable semi-annually. !f the appropriate discount rate is 16 percent, what price should the bond command in the market place?2. Determine the future values utilizing a time preference rate of 9 per cent.a. The future value of Rs. 15,000 invested, now for a period of four years.b. The future value at the end of five years of an investment of Rs. 6,000 now and of an investment of Rs. 6,000 one year from now?c. The future value at the end of eight years of an annual deposit of Rs. 18,000 each year.3. Xu Lin recently obtained a 10 year, Rs. 50,000 loan. The loan carries an 8% compound annual interest rate and calls for equated annual installment payments at the end of each of the next 10 years.a. How much is the equated annual installment Potentially large anticipated benefitsb. t, amount?c. How much total interest will be paid over the life of the loan?4. Mr. Vittal wishes to purchase an annuity contract that will pay him Rs. 7000 a year for the rest of his life. The Life Insurance Company figures that his life expectancy is 20.years, based on actuary tables. The company inputs a compound annual interest rate of 6 percent in its annuity contracts.a. How much will Vittal have to pay for the annuity?b. How much would he have to pay if the interest rate were 8 percent?5. Using annual, semi-annual and quarterly compounding periods for each of thefollowingi. compute the future value if Rs.1,000 is initially deposited and ii. Determine the effective rate of interest.(a)At 10 percent annual interest for 5 years(b)At 8 percent annual interest for 6 years(c)At 6 percent annual interest for 10 years6. You are 20 year old today and you are planning for savings to settle at the time of your retirement. You expect to retire at 50 years and will live for 25 years after retirement. You have to buy a house at the time of retirement costing Rs. 50 lacks (cost at the time of retirement). You also expect annual living expenses of Rs. 6 lacks / year for your expected life after retirement. How much you need to have saved by your retirement date. Assume rate of interest at 8%. Also calculate how much you need to save each year till retirement to reach at the amount you have to save as per your retirement plan.

7. A finance Co. makes an offer to deposit a sum of Rs.1100 & receive a return of Rs.80 p.a. perpetually. Should this offer be accepted if the rate of interest is 5%?