What is the future value of the gift » Full Grade

Assignment ID: FG133082461

-Mr. Zaid has a choice between receiving Rs.1,000,000 from his great-uncle one year from today or Rs. 900,000 from his great-aunt today. He believes he could invest the Rs. 900 ,000 at a one-year return of 12%.

-What is the future value of the gift from his great-uncle upon receipt? From his great-aunt? Which gift should he choose?

-At what rate is he indifferent?

-How does your answer change in part (a) if there is tax on interest income at the rate 15%?

-A new bond of Rs. 900 ,000 is currently issued for one year, that guarantee you to pay every month Rs. 8500. Is this investment worthy?

-You must pay a creditor 600,000 one year from now, 500,000 two years from now, 400,000 three years from now, 200,000 four years from now, and a final 100,000 five years from now. You would like to restructure the loan into equal monthly payments. If the agreed interest rate is 6% compounded annually, what is the monthly payment?

-The exchange rate between the Pakistan Rupee and the dollar is currently Rs. 170 per dollar, the dollar interest rate is 3% per year, and the Rupee interest rate is 9% per year. You have 1,000,000 in a one-year account that allows you to choose between either currency, and it pays the corresponding interest rate.

-If you expect the rupee/dollar exchange rate to be Rs. 185 per dollar a year from now and are indifferent to risk, which currency should you choose?

-What is the break-even value of the rupee/dollar exchange rate one year from now?

-The interest rate on conventional 1-year Treasury bonds is 7% and the interest rate on 1-year TIPS (Treasury inflation-protected securities) is 2.5%. You have 100,000 to invest in one of them.

-If you expect the average monthly inflation rate to be 0.5%, which bond offers the higher expected rate of return?

-At what inflation rate per month you will be indifferent?

-Mr. Zaid charged Rs.100,000 worth of merchandise one year ago on his MasterCard, which has a stated interest rate of 18% APR compounded monthly. He made 12 regular monthly payments of Rs. 5000, at the end of each month, and refrained from using the card for the past year. How much does he still owe?