RE: “Money and Banking (MGT411)” GDB Solution
Ans1
FV= 2400000*(1+0.4)8
FV=3284565,721
Ans2
PV = FV/ (1+i)n
PV=3,284,565.721/(1+0.09)8
PV=1,648,412
Ans3
FV = PV*(1+i)n
FV= 2,400,000*(1+0.06)8
FV=3825235
How much invest today when house prices appreciate at the rate of 6% per annum
PV = FV/ (1+i)n
PV=3825235/(1+0.09)8
PV=1919756
Ans4
Considering the fact that the house prices will grow at the rate of
4% per annum
So,
Future Value =3,284,565.721
Being deposit in less risky certificate of deposits earning only 5% p.a. thEN
PV = FV/ (1+i)n
PV=3284565.721/(1+0.05)8
PV=2223123.367
Ans5
house prices will grow at the rate of 4% per annum
Future Value of house after four year is FV=3,284,565.721
Invest in more risky growth stocks earning 12% rate of return
PV = FV/ (1+i)N
PV=3,284,565.721/(1+0.12)8
PV=1326581.006
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