Thursday, 27 October 2011

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Answer No.1
Formula for the Future value of Rs.2,400,000 after 8 years at the rate of 4% pa:

FV = PV(1+i)n
Putting the values in the formula

FV = 2,400,000(1+0.04)8
FV = 2,400,000(1.04)8
FV = 2,400,000(1.368569)
FV = 3,284,566

Answer No.2
If the FV = 3,284,566, n = 8, Interest Rate = 9%, then PV = ?
FV = PV(1+i)n
Putting the values in the formula
3,284,566 = PV(1+0.09)8
3,284,566 = PV(1.09)8
3,284,566 = PV (1.992563)
3,284,566/1.992563 = PV
PV = 1,648,413

Answer No.3
In this part first find the house value after 8 years at the rate of 6%pa, then the amount that should be invest today at the rate of 9% to able Mr. Naeem to purchase the house after 8 years.
FV = 2,400,000(1.06)8
FV = 2,400,000(1.593848)
FV= 3,825,235 
Now the amount that should to be invest 
FV = PV(1+i)n
3,825,235 = PV(1.09)8
3,825,235 = PV(1.992563)
3,825,235/1.992563 = PV
PV = 1,919,756

Answer No.4

Value of the house after 8 years = 3,284,566(already calculated in Question No.1)
Interest Rate = 5%, PV(Amount that has to deposit in Bank today) = ?
3,284,566 = PV(1.05)8
3,284,566 = PV(1.477455)
PV = 2,223,123

Answer No.5
Value of House after 8years (FV) =3,284,566, interest Rate = 12%, PV = ?
FV = PV(1+i)8
3,284,566 = PV(1.12)8
3,284,566 = PV(2.475963)
PV = 3,284,566/2.475963
PV = 1,326,581
 IS THIS SOLUTION RIGHT @VUASKARI , AFAAQ

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