Fundamentals of Financial Management, Third Edition

SOLVED NUMERICAL PROBLEMS

1. A person borrows Rs 10,000 for 4 years at 10% interest rate. Find the annual equal instalments that he has to pay.

   Solution

   Since present value interest factor from an annuity corresponding to 10% and 4 years,

   PVIFA 10%, 4 years = 3.1699

   Annual instalment = Rs 10,000/3.1699 = Rs 3,154.67

   Instalment payment schedule

   

    

2. A person borrows Rs 10,000 for 4 years at 10% interest rate. Find the size of total instalments when principal is repaid in equal instalment annually.

   Solution

   Repayment Schedule

   

    

3. A person borrows Rs ...