Interest and Time Value of Money

Elaborate nominal and effective interest rate with a suitable example. A new machine is expected to cost Rs. 6,000 and have a life of 5 years. Maintenance costs will be Rs. 1,500 the first year, Rs. 1, 700 the second year, Rs. 1, 900 the third year, Rs. 2,100 the fourth year, and Rs. 2,300 the fifth year. How much should be deposited in a fund that earns 9% per year, compounded monthly, in order to pay for this machine?

Differentiate between simple interest and compound interest. How many deposits of Rs.50, 000 each should make per month so that the future amount will be Rs. 20, 00.000 if the bank interest rate is 10% per year?

Differentiate between simple and compound interest. What is the relation between nominal and effective interest rate? How long will it take for Rs 25,000 to triple itself, if the interest rate is 8% per year?