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A sum of Rs. 25, 000 is borrowed over 8 years. What will be the monthly repayments @ 18% compounded monthly?
a. 439
b. 493
c. 394
d. 349
Ans - b
Explanation :
Here,
PV = Rs. 25000
T = 8 years = 8 × 12 = 96 months
R = 18% = 18% ÷ 12 = 0.015% monthly
PV = P / R * [(1+R)^T - 1]/(1+R)^T
25000 = P × (1.01596 – 1) ÷ (0.015 × 1.01596)
25000 = P × 50.7017
P = 25000 / 50.7017
= 493
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An investment at 10% is compounded monthly, what shall be the effect interst rate for this?
a. 10.18 %
b. 10.25 %
c. 10.47 %
d. 10.51 %
Ans - c
Solution :
= (1+0.10/12)^12-1
= 10.47
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Find the present value of quarterly payment of Rs. 250 for 5 years @ 12% compounded quarterly.
a. 3179
b. 3019
c. 3109
d. 3719
Ans - d
Explanation :
Here,
P = Rs. 250
T = 5 years = 5 × 4 = 20 quarters
R = 12% = 12% ÷ 4 = 0.03% quarterly
PV = P / R * [(1+R)^T - 1]/(1+R)^T
PV = 250 × (1.0320 – 1) ÷ (0.03 × 1.0320)
= 3719
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What is the discount factor for Re. 1 to be received at the end of 2 yr with prevalent rate of 8% ?
a. 0.890
b. 0.873
c. 0.857
d. 0.842
Ans - c
Solution :
= 1/(1+r)n
= 1/(1.08)^2
= 0.857
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A quarterly repayments of a loan carry an interest rate of 8 % per annum. What is the effective annual interest rate?
a. 8.4 %
b. 8.2 %
c. 8.3 %
d. 8.5 %
Ans - b
Solution :
EAR i = (1 + r/m)^m - 1]
= (1+8/4)^4-1)
= 8.2
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You are receiving Rs. 10000 every year for the next 5 years (at the end of the period) and you invest each payment @ 5%. How much you would have at the end of the 5-year period?
a. 55526
b. 55652
c. 55265
d. 55256
Ans - d
Explanation :
Here,
P = 10000
R = 5% p.a.
T = 5 yrs
If invested at the end,
FV = P / R * [(1+R)^T - 1]
FV = 10000 × (1.05^5 – 1) ÷ 0.05
= 55256
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