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Anvita wants to receive a fixed amount for 10 years by investing Rs. 10 lacs @ 12% ROI. How much he will receive annually?
a. 167894
b. 176984
c. 187964
d. 196874
Ans - b
Solution:
P = 10 lac
R = 12% p.a.
(SINCE PAYMENT IS TO BE RECEIVED ANNUALY, NOT Monthly, Rate IS NOT divided by 12)
T = 10 yrs
(SINCE PAYMENT IS TO BE RECEIVED ANNUALY, NOT Monthly, Time IS NOT multiplied with 12)
So, we can well use simple EMI formula in this question.
The formula of EMI =
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P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }
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So,
EMI = 1000000 * 0.12 * 1.12^10 ÷ (1.12^10 – 1)
= (1000000*0.012*3.1058) ÷ 2.1058
= 372702 / 2.1058
= 176984
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Madhu had availed a loan of Rs. 120000 @ 12%, which she has to pay in 6 equal annual installments. Calculate the amount of installment?
a. 21897
b. 27897
c. 28197
d. 29187
Ans - d
Solution:
P = 120000
R = 12% p.a.
(SINCE PAYMENT IS TO ANNUALY, NOT Monthly, Rate IS NOT divided by 12)
T = 6 yrs
(SINCE PAYMENT IS TO BE ANNUALY, NOT Monthly, Time IS NOT multiplied with 12)
So, we can well use EMI formula in this question as we did in questions no 4, 5, 6 & 7
The formula of EMI =
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P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }
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EMI = 120000 × 0.12 × 1.12^6 ÷ (1.12^6 – 1)
= (120000*0.012*1.9738) ÷ 0.9738
= 28423 / 0.9738
= 29187
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You will be receiving Rs. 100000 at the end of each year for the next 15 years. If the current discount rate for such a stream of cash is 9%, find the present value of cash flow.
a. 800669
b. 806069
c. 860609
d. 866009
Ans - b
Solution:
Since 100000 is like EMI. So, to find P, we use the formula of EMI
The formula of EMI =
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P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }
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100000 = P × 0.09 × 1.09^15 ÷ (1.09^15 – 1)
100000 = P × 0.09 x 3.64248 ÷ 2.64248
264248 = P x 0.32782
P = 806069
This can be done with PV (OA) Present Value Ordinary Annuity too.
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