tvm and bond valuation

7/25/2019 TVM and Bond Valuation

1/28

1. Someone promises to give you RS. 1000 three ye

Future Value 1000

Interest Rate 10%

Maturity Period 3

Present Value ($751.31) PV(B3,B,0,B!)2. What is the present value of a 5 years annuity of

Periodi"al #ontriution !000

Interest Rate 10%

Maturity Period 5

Present Value ($7,51.57)

3. Mahesh eposits Rs. 200000 in a !an" account w

Present Value !00000

Interest Rate 10%

Maturity Period 15

Periodi"al Return ($!&,!'.7&)

. &'( (ompany e)pects to receive Rs.1*00*000 for

&ssuming a 10% rate of interest *how much woul tFuture Value 100000

Interest Rate 10%

Maturity Period 10

Present Value ($&1,5&.71) PV(B!!,B!3,B!1

5,


2/28

rs hence what is the present value of this amount if th

PV(Rate,,nnuity,PV) ns * 731.31s. 2000 at 10%

PV(Rate,,nnuity,PV) ns * 751.57

ich pays 10% interest. #ow much can he withraw ann

PM+ (Rate,,PV,FV) ns * !&,!'.7&

perio of 10 years from a new pro+ect it has +ust un

e present valus of this annuity ns. &1

)


3/28

e interest rate is 10%

ually for a perio of 15 years$

rta"en

500


4/28

1. you invest Rs. 1000 for 3 years in a savings accoun

Present Value 1000

Interest Rate 10%

Maturity Period 3

Future Value ($1,331.00) FV(B3,B,0,B!)

2. ,ou eposit Rs. 1000 annually in a !an" for 5 years

Periodi"al ount 1000

Interest Rate 10%

Maturity Period 5

Future Value ($&,105.10) FV(B',B10,B)

3. Mr -harun plans to sen his son for higher stuies

#ow much shoul he save annually to have a sum of

Future Value 100,000

Interest Rate 1!%

Maturity Period 10

Periodi"al #ontriution ($5,&'.!) PM+(B1&,B17,0,B15)

. ,ou have ecie to eposit Rs. 30000 per y

fun account at the en of 30 years if the interPresent -alue 30000

Interest Rate 11%

Maturity Period 30

Future -alue ($5,'70,&!&.3) FV(B!3,B!,B!!)


5/28

t that pays 10% interest per year. #ow much it will gro

sinle "as/ o, one tie annuity

FV (Rate,,nnuity,PV) ns *1331

an your eposits earn a compoun interest rate of 10

annuity * 1000 rs 2aid ea"/ yr (unior at)

FV (Rate,,nnuity,PV) ns &105.1

a!roa after 10 years. #e e)pects the cost of these stu

s. 100000 at the en of 10 years. f the interest rate is

PM+ (Rate,,PV,FV) ns 5&'.!

ar in your pu!lic provient fun account for 30 y

st rate is 11%.

FV (Rate,,nnuity,PV) ns * 5'70&!&.3


6/28

$

%. What will !e the value of this series of eposits at t

ies to !e Rs. 100000.

12%.

ars. What will !e the accumulate amount in yo


7/28

e en of 5 years$

r pu!lic provient


8/28

Housing Loan Amount 1000000

Down Payment 200000

Interest rate 10.00%

Maturity 15 years

Loan Amount 800000Interest Rate

Repayment Period

EMI

Period /rincipal &mount M

1

!

3

5

&

7

'

10

11

1!

13

1

151&

17

1

1'

!0


9/28

!1

!!

!3

!

!5!&

!7

!

!'

30

31

3!

33

3

35

3&

37

3

3'

01

!

3

5

&

7

'

50

51

5!


10/28

53

5

55

5&

575

5'

&0

&1

&!

&3

&

&5

&&

&7

&

&'

70

71

7!73

7

75

7&

77

7

7'0

1

!

3


11/28

5

&

7

''0

'1

'!

'3

'

'5

'&

'7

'

''

100

101

10!

103

10105

10&

107

10

10'

110

11111!

113

11

115

11&


12/28

117

11

11'

1!0

1!11!!

1!3

1!

1!5

1!&

1!7

1!

1!'

130

131

13!

133

13

135

13&137

13

13'

10

11

1!

131

15

1&

17

1


13/28

1'

150

151

15!

15315

155

15&

157

15

15'

1&0

1&1

1&!

1&3

1&

1&5

1&&

1&7

1&1&'

170

171

17!

173

17

17517&

177

17

17'

10


14/28

"on-ert yearly interest rate to ont/ly int rate

ei e4uated ontly in-estent * "on-ert 15 yrs into ont/s

it/in ra"ets* sin"e oney is outo orula

ulti2ly into *1 to ae it as 2ositi-e and reo-e ra"et

nterest /rincipal Repayment emaning 'alance


15/28


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* 2t


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26/28

1 Face Value 100

Interest Rate 12% coupoun rate

Interest payment 12

Maturity 8

Epected !ield 1"% ytm # epected rate o$ retuen

Po &55'()* p+yield rate,no o

intrinsic. economic. epected +alue $or yr money

2 Face Value 100

Interest Rate 1(% coupoun rate

Interest payment 1(

Maturity 8Epected !ield 1"% ytm # epected rate o$ retuen

Po p+yield rate,no o


/ Face Value 100

Interest Rate 1"% coupoun rate

Interest payment 1"Maturity 8

Epected !ield 1"% ytm # epected rate o$ retuen

Po p+yield rate,no o



27/28

iscount ond# epected is more t-an t-e actual

yrs, eac- yr amt, amt at end o$ maturity* Ans # 0')2

Premium ond# epected is more t-an t-e actual

so you -a+e to pay more money o$ 10 rs instead

yrs, eac- yr amt, amt at end o$ maturity* Ans 10'28

ond at par# epected is more t-an t-e actual rat

pay same money o$ 100 rs o$ $ace +alue

yrs, eac- yr amt, amt at end o$ maturity* Ans # 100


28/28

ate

PV35,3",3/,31*

rate

o$ 100 rs o$ $ace +alue

PV31/,312,311,3*

PV321,320,31,31)*

tvm and bond valuation

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