﻿ Process Economics - Time Value of Money - GATE Chemical Engineeirng - Questions - with Solutions at MSubbu Academy

## Time Value of Money

### 0900-1-eco-1mark

0900-1-eco

A financial bank charges 1 percent per week on the loans. Assume there are exactly 52 weeks in a year. What is the effective annual interest rate?

• 22.55%
• 38.98%
• 67.77%
• 52%

### 0900-3-eco-1mark

0900-3-eco

You have deposited Rs. 1,500 in an account that promises to pay 8% compounded quarterly for the next five years. How much will you have in the account at the end?

• Rs. 1,598.33
• Rs. 2,020.92
• Rs. 2,228.59
• Rs. 2,203.99

### 0900-4-eco-1mark

0900-4-eco

An investment option is available with continuous compounding at 5% interest. If you invest Rs. 8,000 now, how much interest income will you earn if you cash out in 3.5 years?

• Rs. 1,172
• Rs. 1,400
• Rs. 1,490
• Rs. 1,530

### 0900-5-eco-1mark

0900-5-eco

Which of the following statements is TRUE? (Assume that the yearly cash flows are identical for both annuities and that the common interest rate is greater than zero.)

• The present value of an annuity due is greater than the present value of an ordinary annuity
• The present value of an ordinary annuity is greater than the present value of an annuity due
• The future value of an ordinary annuity is greater than the future value of an annuity due

### 0900-6-eco-1mark

0900-6-eco

Study the timeline and accompanying 5-period cash-flow pattern below.

The present value of the 5-period annuity shown above as of Point $$X$$ is the present value of a 5-period ________, whereas the future value of the same annuity as of Point $$Y$$ is the future value of a 5-period ___________.

• ordinary annuity, ordinary annuity.
• ordinary annuity, annuity due.
• annuity due, annuity due.
• annuity due, ordinary annuity.

[Index]

### 0900-7-eco-1mark

0900-7-eco

If you take out a 4-year Rs. 8,000 car loan that calls for monthly payments at an annual percentage rate of 10%, compounded monthly, what is your monthly payment?

• Rs. 170.05
• Rs. 180.20
• Rs. 240.40
• Rs. 202.90

### GATE-CH-2001-2-21-eco-2mark

2001-2-21-eco

An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment (in Rs.) at the end of five years will be

• $$1000(1+0.1/4)^{20}$$
• $$1000(1+0.1)^{20}$$
• $$1000(1+0.1/4)^5$$
• $$1000(1+0.1/2)^5$$

### GATE-CH-2002-2-14-eco-2mark

2002-2-14-eco

If an amount $$A$$ is paid at the end of every year for $$n$$ years, then the net present value of the annuity at an interest rate of $$i$$ is

• $$\displaystyle A\left[\frac{(1+i)^n-1}{i}\right]$$
• $$\displaystyle A\left[\frac{(1+i)^n-1}{i(1+i)^n}\right]$$
• $$\displaystyle A(1+i)^n$$
• $$\displaystyle \frac{A}{(1+i)^n}$$

### GATE-CH-2003-26-eco-1mark

2003-26-eco

A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as

• perpetuity

• capital charge factor

• annuity

• future worth

### 0900-2-eco-1mark

0900-2-eco

What is the monthly interest rate (in %) equivalent to a quarterly interest rate of 2.5%?

[Index]

### GATE-CH-1988-19-iii-eco-4mark

1988-19-iii-eco

A bond matures after five years and has a maturity value of Rs. 1000. If the interest rate is 12%, what is the present worth (in Rs.) of the bond?

### GATE-CH-2014-43-eco-2mark

2014-43-eco

A cash flow of Rs. 12,000 per year is received at the end of each year (uniform periodic payment) for 7 consecutive years. The rate of interest is 9% per year compounded annually. The present worth (in Rs.) of such cash flow at time zero is ______

### GATE-CH-2017-53-eco-2mark

2017-53-eco

A bond has a maturity value of Rs. 20,000 at the end of 4 years. The interest is compounded at the rate of 5% per year. The initial investment to be made, rounded to the nearest integer, is Rs. ________

### 0900-11-eco-4mark

0900-11-eco

A lending company specifies a EMI (equated monthly installment) of Rs. 3515 for a loan amount of Rs. 100,000 which is to be paid in 3 years time. Calculate: (i) the interest rate per month, and, (ii) the effective annual interest rate. Loan amount is sanctioned at the start of the 3 year period. Repayment starts from the end of first month, and to continues still the end of 3 years (i.e., 36 installments).

(i) the interest rate per month (rounded to third decimal, in %)

{#1}

(ii) the effective annual interest rate (rounded to second decimal, in %)

{#2}

### 0900-13-eco-2mark

0900-13-eco

In year zero, you invest Rs. 10,000 in a 15% security for five years. During that time, the average annual inflation is 6%. How much, in terms of year zero dollars, will be in the account at maturity?

• Rs. 6653

• Rs. 13382

• Rs. 15030

• Rs. 15386

### GATE-CH-PI-2008-32-eco-2mark

PI-2008-32-eco

A man has deposited Rs. 1,000 per year for three years in a bank that paid him 5% interest compounded annually. At the end of three years, he had Rs. 3,153 in his account. How much more would he have earned if the bank had paid him 5% interest compounded continuously?

• Rs. 300
• Rs. 30
• Rs. 3
• Rs. 0.30

### 0900-10-eco-2mark

0900-10-eco

Calculate the maturity value (future worth) at the end of 4 years, for a periodic deposit of Rs. 1250 made at the start of every month, for 4 years. Interest rate is 10.5% per year, compounded quarterly.

### 0900-12-eco-2mark

0900-12-eco

You plan to buy a car that has a total "drive-out" cost of Rs. 25,700. You will make a down payment of Rs. 3,598. The remainder of the car's cost will be financed over a period of 5 years. You will repay the loan by making equal monthly payments. Your quoted annual interest rate is 8% with monthly compounding of interest. (The first payment will be due one month after the purchase date). What will your monthly payment be (in Rs.)?

[Index]