Essay on Time Value of Money

1327 Words Feb 3rd, 2013 6 Pages
TIME VALUE of MONEY Exercises
Author: Luigi V. TAVA

Copyright SDA Bocconi revised 2004.10 EMQ 901

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1) For a loan of 9.2 estimate the future refund value (principal, interest, total) with simple interest: a) yearly rate 5%, for 6 years and 4 months b) yearly rate 8%, for 7 years, 2 months and 15 days 2) With a starting investment of 3.65 how long does it take to have a final total value of 4.779 with a 5.2% yearly rate, simple interest ? 3) 10 years ago you deposited 15.6 in a bank account paying 5% (yearly compounding). Six years ago you withdraw 8.465 from the same account and reinvested the same amount at 7.25% (yearly) How much is available now (total)? 4) 3 years ago your parents opened a “saving account” in your favour
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15) 30 are invested today at 18%, how long will it take to have 80? 16) How much should you invest today in order to have 100 after 6 years if the expected yield is 12%? 17) Thanks to a government subsidised preferential loan (ex “Italian Sabatini law”: rational discount) you can discount a 2 year bill, face value 100, for a net present value of 90.909. Find the “rational” discount rate. 18) 15 are invested today at 14%, how long will it take to have 40?

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19) 50 are invested today at 15%, nominal convertible semi annually, how much will be available after 3 years? 20) 30 are invested today at 20%, quarterly-convertible nominal rate, how much will be available after 2 years? 21) 100 are available 3 years from now, how much can you receive today with a discount rate of 16%? 22) You borrow today 50 from a bank charging a 12%, quarterly-convertible, nominal rate. How much will be your debt after 3 years? 23) You’ll have 100 available in 5-year time, what is the amount you may cash now if a 16% yearly rate, convertible on a quarterly basis, is charged? 24) How long does it take to double any amount of money invested at 21% “effective”, convertible on a monthly basis? 25) Investing today 10 at 11.5%, nominal quarterly-convertible, how much will be available in 4 years? 26) Investing today 30 at 7.8%, nominal four-monthly-convertible, how much will be available in 5 years? 27) You borrow money at 6% yearly “real” rate; find the total rate if the inflation rate is

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