SM Nahidul Islam
Dept. of Finance & Banking (2nd batch)
Problems & Solutions
Problem -1: What is the- present value (today) of the following cash flows at an interest rate of 12
percent per year?
a. $100 received five years from now.
b. $100 received each
SM Nahidul Islam
Dept. of Finance & Banking (2nd batch)
1. Define Time value of money & State the role / importance / significance of time value of
money
Answer: Time value of money is the premise that an investor prefers to receive a payment of a fixed
a
SM Nahidul Islam
Dept. of Finance & Banking (2nd batch)
1. Define Risk & State the relationship between risk and return
Answer: Risk is defined as the chance of financial loss, as measured by the variability of expected returns
associated with a given ass
SM Nahidul Islam
Dept. of Finance & Banking (2nd batch)
1. Define Finance
Answer: Finance means money; money related all liquidities and money related all activities. It is the
commercial activity of providing funds and capital.
Finance: Finance is the st
SM Nahidul Islam
Dept. of Finance & Banking (2nd batch)
1. Define cost of Capital & state the assumptions of cost of capital
Answer: Cost of capital is the required rate of return on its investments which
belongs to equity, debt and retained earnings. If