Chapter 6-1.pdf Chapter 9-1.pdf Chapter 13-1.pdf

Chapter 6-Discussion Questions
    1)     In case of long-term projects, the funds are required for a,longer period of time, The valie of each rupee changes with the passag eof time. Therefore, in case when the funds are required for a long period of time, time value of money helps in knowing about the present value of all the inflows and outflows from the project. Therefore, the analysis of the project become apt in such scenario.
    2)    From my own experience, examples of annuities include the payment of mhy education loan, housing loan and annual payment to deposit schemes
Chapter 6
    1)    PV    100000
        ROI    6%
        Tenure     5
        FV    133822.55776
        After 5 years, the amount will be $133822
    2)    PV    120000
        ROI    6%
        Tenure     60
        EMI    -$2,319.94
        The budgeted monthly payment should be around $2,319.94
    3)        Company A            Company B
        Cash Outflow    Amount    Discounting Factor    Present Value    Amount    Discounting Factor    Present Value
        Initiatl outflow    -105000    1    -105000    -110000    1    -110000
        Year 1    -2000    0.926    -1851.8518518518    -1500    0.926    -1388.8888888889
        year 2    -2000    0.857    -1714.6776406036    -1500    0.857    -1286.0082304527
        Year 2    -2000    0.794    -1587.6644820403    -1500    0.794    -1190.7483615302
        Year 3    -2000    0.735    -1470.0597055929    -1500    0.735    -1102.5447791947
        Year 4    -2000    0.681    -1361.1663940675    -1500    0.681    -1020.8747955506
        Year 5    -2000    0.630    -1260.3392537662    -1500    0.630    -945.2544403247
        Year 6    -2000    0.583    -1166.9807905243    -1500    0.583    -875.2355928932
        Year 7    -2000    0.540    -1080.5377690039    -1500    0.540    -810.403326753
        Year 8    -2000    0.500    -1000.4979342629    -1500    0.500    -750.3734506972
        Year 9    -2000    0.463    -926.3869761694    -1500    0.463    -694.790232127
        Year 10    -2000    0.4288828593    -857.7657186753    -1500    0.4288828593    -643.3242890065
        Present Value of Total outflows            -119277.928516558            -120708.446387419
        The Present Value of outflow in case of company A is lower therefore, the bus should be purchased from Company A
    4)    Current Cost    10145825
        Cost after 5 years     11160407.5
        ROI    4.50%
        Yearly payments for 4...