What is the difference in the present value

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Q1. You collect old coins. Today, you have two coins each of which is valued at RM250. One coin is expected to increase in value by 6 percent annually while the other coin is expected to increase in value by 4 percent annually. What will be the difference in the value of the two coins 15 years from now?

Q2. Todd is able to pay RM160 a month for five years for a car. If the interest rate is 5 percent, how much can Todd afford to borrow to buy a car?

Q3. The Ajax Company just decided to save RM1,500 a month for the next five years as a safety net for recessionary periods. The money will be set aside in a separate savings account which pays 3.25% interest compounded monthly. It deposits the first RM1,500 today. If the company had wanted to deposit an equivalent lump sum today, how much would it have had to deposit?

Q4. You are scheduled to receive annual payments of RM10,000 for each of the next 25 years. Your discount rate is 8.5 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?

Reference no: EM132983566

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