1. suppose you are paying off a loan with 24 equal monthly installments of rs 5000 each the first installment is due immediately and the monthly interest rate is 1% what is the present value of the series of cash flow 2. If a bank pays you 6% interest per year on your deposit, compounded monthly, what is the effective annual rate you are earning? 3. You can buy or sell 10 apples for 200 rupees and 6 oranges for 150 rupees. You can buy or sell a bag of 10 apples and 6 oranges for 300 rupees. Is there an arbitrage opportunity? If yes what will you buy and sell? 4. If nominal interest rate is 10% and real rate is 6%, what is the expected inflation rate? 5. Mr. Selvam can deposit his savings at the Bank, which offers to pay 12.3% interest compounded monthly, or at bank 2 which will pay interest of 12% compounded continuously. Which bank offers higher effective annual rate? 6. Mr X plans to deposit money in savings account earning a states annual interest rate of 8.5% compounded quarterly. He will make 7 equal annual deposits of 19,750 with the first payment made at end of year 1. No deposits and withdrawals will be made after that. Find the balance in his account at end of year 11. 7. Assume that you can invest to earn a stated annual rate of return of 12%. but where interest is compounded semi annually. If you make 20 consecutive semi annual deposits of 500 each, with first deposit being made today, what will your balance be at the end of year 20? 8. Mr X evaluates different types of financial opportunities as a hobby. She has recently seen an advertisement for a security that promises to make payments forever. The payments are as follows. ( all amounts are received at the end of the year) Year 1 to 3 : 100 per year Year 4 to 6 : 200 per year Year 7 onwards: Rs 400 per year forever Which is the most she can pay for this security and still make her 10% required rate of return