1. What is the rate charged if $20,000 attracts a simple interest of $45 per month for 10 years? 2. A newly married couple wants to a mortgage house in the next 8 years at $200,000. If they save $50,000 in an account that compounds their saving at 1% per month, will the couple be able to buy the mortgage house? 3. Your business has decided to go for a loan worth 170,000 at a rate of 12% compounded annually and pay in total 230,000 at the end of the loan terms. How many years would it take your business to pay back the loan. 4. A friend of yours approached you and asked you to help him in his financial plan towards his wedding in five years from now. If the wedding cost and expenses are valued at $230,000 in the next five years, how much should he save monthly to be able to undertake the wedding? Prevailing discount rate is 15% for the first two years and 13% for subsequent years. 5. Assuming that you make de posits of $1000 starting in a year's time for 20 years into a fixed deposit account. If you earn 10,000 as compounded interest, what will be the interest rate attracted by the deposits? 6. Assuming a bank approached you and offered that you made $500 deposit for 10 years and after the tenth year no more deposits are made. Then 45 years after the first ten years, you or your beneficiaries will be paid $75,000. Would you accept the offer if 15% interest rate is attributable to the first 20 years and the remaining years' attributable interest rate is 17%. 7. Assuming that Prudential Bank, GN Bank, GCB and HFC Bank are all willing to grant to you a loan value at $105,000 to fund you doctoral degree in finance. They quote their rates as 0.5% per week, 1.5% per month, 3% per quarter and 4.5% per half year respectively. Which of the loans will you go for and why? 8. What is the value of a perpetuity bond today that is expected to pay $65 of interest per year forever if the investor requires an annual return of 7.5 percent? What will be the value of the bond in two years? What if the interest payment was for 10 years? 9. Calculate the present value of a stock that is expected to pay $48 as dividend for the first five years and $50 afterwards forever if the investor requires an annual return of 8 percent and grows at 2.5% after the first five years. 10. As financial Manager, your company is deciding to go for a loan from bank valued $300,000,000. Your company records an annual income of $99,500,000 and is able to provide collateral worth $181,000,000. If the threshold acceptable for granting loans to corporate entities is half of total annual income, should your company be granted the loan? Prepare a repayment schedule for this loan contract using interest-only, straight line and reducing balance method assuming the loan is granted
