Re: vu experts - MGT 201 Assignment - 1 Solution required

I think for the first plan Interest rate  of 6.5 % should not divided by 2, as payments are after every six months

On Fri, Nov 11, 2011 at 2:46 PM, mc090403918 Sehrish Javed <mc090403918@vu.edu.pk> wrote:

PLAN A
First plan requires a deposit of Rs 5000 every six months with annual
interest rate 6.5 percent, compounded semiannually.
QUESTION
What will be the future value of the first plan at the end of 10 year?
Part A answer:
Future value= .PMT [((1+1) n-1)/i]
Future value=5000[((1+.0323)20 -1)/.0325]
Future value=5000[((1.0323)20-1)/.0323]
Future value=5000[(1.895837924-1)/.0325]
Future value=5000[.895837924/.0325]
Future value=137821.2191

PLAN B
However under the second plan, he has to deposit Rs 10000 every year
with interest rate pf 7.5 percent compounded annually.

Part B answer:
Future value= .PMT [((1+1) n-1)/i]
Future value=10000 [((1+.075) -1)/.075]
Future value=10000 [((1.075)10-1)/.075]
Future value=10000 [(2.061031562-1)/.075]
Future value=10000 [1.061031562/.075]
Future value=10000[14.1470875]
Future value=141470.875

Part C
You are required to analyze that plan which would be suitable for him
keeping in his view major concern. The value of the plan at the end of
10 year.
Part c answer:
2nd plan is suitable for him whereas keep in view his main concern.

Part D
What would be the change in your decision if the interest rate on 2nd
plan is also 6.5 percent?
Part D answer:
If interest rate of the 2nd plan 6.5 percent than I will chose plan A
because using 6.5 percent interest rate the FV for plan would be
134944.22 which is lower than plan A
 is it right solution or not

On 11/11/11, mc090404040 Muhammad Mateen <mc090404040@vu.edu.pk> wrote:
>  need solutions of MGT 201 Assignment 1. Please upload right
>> solution
> On 11/10/11, mc110202236 Tariq Maqsood <mc110202236@vu.edu.pk> wrote:
>> Dear Allz,
>>
>> I need solutions of MGT 201 Assignment 1. Please upload right
>> solution.....................
>>
>>
>> MC110202236
>>
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