SEMESTER SPRING 2013
MONEY & BANKING (MGT411)
ASSIGNMENT NO. 01
DUE DATE: MAY 06, 2013
MARKS: 20
ASSIGNMENT:
Learning Objectives:
CASE:
Inflation is a concept that always remains the key issue in every era of human kind. It is a situation where the prices of the commodities go high and high. It is very important for both the economists and the financial wizards for multiple reasons. Economists remain concerned about it for the reason that they need to consider the prices of all the commodities and the situation of market for all the masses and organizations. Financial managers also remain concerned about it for the reason as their utmost concern is to manage and balance their records of financial transactions. It is due to inflation that the prices of commodities vary from time to time and the quantity of money necessary to purchase a product one day may not be enough to buy the same
quantity some other day. Therefore organizations need to frugally play their cards so that they may invest money and their investment and calculations may help them in the long run as well.
Question 1
After analyzing the above tables, you are required to calculate the inflation rate of year 2012(from consumption and production prospective), considering the “preceding year” as base year. (10 marks)
Question 2
a. 20 years ago, your father invested an amount at 5% interest. Now he gave you received amount Rs. 8, 00,000. You are planning to purchase your Dream House after 15 years.
• Today, you invest the amount at 15 %, given to you by your father.
• 2 years back you won a lottery of Rs. 2, 00, 000 which you had invested immediately at 10% interest for your Dream.
You will be able to purchase your Dream house with receiving of the two investments and make your dream comes true exactly according to your planning.
Calculate the amount which was invested by your father? What is the cost of your Dream House? (5 marks)
b. Today, your brother invested the amount of Rs. 10, 000 at 9 % interest for 10 years. You are interested to have the same amount as your brother at the end of 10 years, but you have only one option of 7.5 % interest. How much more money, you will need to invest to get the same amount at the end of 10 years like your brother. (5 marks)
MONEY & BANKING (MGT411)
ASSIGNMENT NO. 01
DUE DATE: MAY 06, 2013
MARKS: 20
ASSIGNMENT:
Learning Objectives:
- • The first question will enable the students to understand two different methods, to
- • The second question will enable the students to understand and implement the concept
CASE:
Inflation is a concept that always remains the key issue in every era of human kind. It is a situation where the prices of the commodities go high and high. It is very important for both the economists and the financial wizards for multiple reasons. Economists remain concerned about it for the reason that they need to consider the prices of all the commodities and the situation of market for all the masses and organizations. Financial managers also remain concerned about it for the reason as their utmost concern is to manage and balance their records of financial transactions. It is due to inflation that the prices of commodities vary from time to time and the quantity of money necessary to purchase a product one day may not be enough to buy the same
quantity some other day. Therefore organizations need to frugally play their cards so that they may invest money and their investment and calculations may help them in the long run as well.
| Sr no | Basket | Kg | Prices(2010) | prices (2011 | prices(2012 |
| 1 | wheat | 2 | 50 | 52 | 55 |
| 2 | wheat flour | 2 | 60 | 58 | 65 |
| 3 | rice basmti broken | 2 | 90 | 85 | 95 |
| 4 | rice irri -6 | 2 | 70 | 65 | 75 |
| 5 | masur pulse washed | 1 | 120 | 125 | 125 |
| 6 | moong pulse washed | 1 | 140 | 140 | 145 |
| 7 | mash pulse washed | 1 | 170 | 170 | 175 |
| 8 | gram pulse washed | 1 | 70 | 70 | 70 |
| 9 | beef | 1 | 210 | 215 | 210 |
| 10 | mutton | 1 | 380 | 385 | 390 |
| other figures includes: | basket | kg | 2010rs(bn.) | 2011 rs (bn.) | 2012 rs (bn.) |
| 11 | nominal GDP | 180 | 215 | 245 | |
| 12 | real GDP | 165 | 195 | 220 |
After analyzing the above tables, you are required to calculate the inflation rate of year 2012(from consumption and production prospective), considering the “preceding year” as base year. (10 marks)
Question 2
a. 20 years ago, your father invested an amount at 5% interest. Now he gave you received amount Rs. 8, 00,000. You are planning to purchase your Dream House after 15 years.
• Today, you invest the amount at 15 %, given to you by your father.
• 2 years back you won a lottery of Rs. 2, 00, 000 which you had invested immediately at 10% interest for your Dream.
You will be able to purchase your Dream house with receiving of the two investments and make your dream comes true exactly according to your planning.
Calculate the amount which was invested by your father? What is the cost of your Dream House? (5 marks)
b. Today, your brother invested the amount of Rs. 10, 000 at 9 % interest for 10 years. You are interested to have the same amount as your brother at the end of 10 years, but you have only one option of 7.5 % interest. How much more money, you will need to invest to get the same amount at the end of 10 years like your brother. (5 marks)
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