1. Q1: lets assume if you invest $1000 today, you will receive $3000 in exactly 8 years. The compound interest rate implicit in this situation. What is the interest rate annually that compounds to give you $3000?

2. Q2: how long would it take for an investment of $1000 to grow to $1,900 if we invest it at a compound annual interest rate of 10%?

3. Q3: Suppose you borrow $22000 at 12% compound annual interest to be repaid over the next six years. Equal instalment payments are required at the end of each year. In addition these payments must be sufficient in amount to repay the $22000 together with providing the lender with a 12% return.

4. Q1:The following cash flows need to be analyzed: YearswXyZ 1100600-200 2 --- 3 --500 4300--- 5 -1200300 a.Calculate the future value of each stream at the end of year 5 with a compound annual interest rate of 10%. b.Compute the present value of each stream if the discount rate is 14%.

5. Q2: Amjad is considering two different savings plans. The first plan have him deposit Rs. 500 every six months and he would receive interest at a 7% annually, compounded semi-annually. Under the 2 nd plan he would deposit Rs. 1000 every year with a rate of interest 7.5%, compounded annually. a.Future value of plan 1 at end of 10 th year b.Future value of plan 2 at end of 10 th year c.Which plan should she go for if he concern is only the savings at end. d.Would your answer change if the annual interest rate changes to 7% for plan 2.

6. Q3: On a contract you have a choice of receiving 25,000, six years from now or 50,000, twelve year from now. At what implied annual interest rate should you be indifferent between the two contracts.

7. Q4: Amjad wishes to purchase an annuity contract that will pay him 7000 a year for the rest of his life. The state life insurance figures that his life expectancy is 20 years. The company imputes a compound annual interest rate of 6% in its annuity contract. a.How much Amjad will have to pay for the annuity b.How much would he have to pay if the interest rate were 8%.

8. Q5: You borrow 10,000 at 14% compound interest for 4 years. The loan should be payable in equal 4 instalments annually. a.What is the annual payment that will completely amortize the loan over 4 years b.Of each equal payment, what is the amount of interest and principal.

9. Q6: You borrow 22,000 at 12% compound interest annually. The loan should be payable in equal 6 instalments annually. Payments are required at the end of the year. a.What is the annual payment that will completely amortize the loan over 6 years. b.You are required to prepare the amortization schedule for the loan.

10. Q7: Haider recently obtained a 10 year, $50,000 loan. The loan carries 8% compound annual interest rate and calls for annual instalment payments of $7,451.47. At the end of the each of the next 10 years. 1.How much of the first year’s payment is principal? 2.How much total interest will be paid over the life of the loan?

11. Q8: How long would it take for an investment of $1000 to grow to $1,900 if we have invested it at a compound annual interest rate of 10 percent?