Determine the present value - annuity, Financial Accounting

Assignment Help:

Assume you are receiving an amount of Rs.5000 twice in a year for subsequent five years one time at the starting of the year and another amount of Rs. 5000 at the ending of the year that you deposit in the bank that pays an interest of 12%. Calculate the value of the deposit at the ending of the fifth year.

Solution: In this type of problem we have to compute the future value of two annuities of Rs.5000 consisting duration of five years. The primary annuity is an annuity due and the next annuity is regular annuity, thus the value of the deposit at the ending of five year would be as:

FVAn  + FVAn(due)

= A [((1 + k)n - 1)/k] +  A [((1 + k)n - 1)/k](1 + k)

= A (FVIFA12, 5) + A (FVIFA12, 5 ) (1 + k)

=5000 (6.353) + 5000 (6.353)(1.12)

= 31,765 + 35,577

=67336

The value of deposit at the ending of the fifth year = Rs. 67,342.


Related Discussions:- Determine the present value - annuity

Major qualitative characteristics of accounting information, Four major qua...

Four major qualitative characteristics of accounting information There are four major qualitative characteristics which influence usefulness of accounting information. Additio

Prepare traditional income statement, Scottsdale Fine Piano%u2019s purchase...

Scottsdale Fine Piano%u2019s purchases pianos from a well-known manufacturer and sells them through their retail store. The Baby Grand Pianos sell, on average, for $2,500 each. The

Risk and return - issue of debt, Q. Risk and Return - issue of debt? Ra...

Q. Risk and Return - issue of debt? Raising debt finance will raise the gearing and the financial risk of the company while raising equity finance will lower gearing and financ

Financial institution, Financial Institution - Organization engaged in any ...

Financial Institution - Organization engaged in any of the many aspects of finance involving thrift institutions, commercial banks, securities brokers, investment banks and dealers

ACCOUNTING DECISIONS, DO ACCOUNTANTS EVER REALLY MAKE IMPORTANT DESIONS?

DO ACCOUNTANTS EVER REALLY MAKE IMPORTANT DESIONS?

Appointment of liquidator, Appointment of Liquidator The liquidator is ap...

Appointment of Liquidator The liquidator is appointed by the court after the above meetings have been held: if the meetings do not agree, the court must settle the issue: if no a

Journal entry for company, 1. Think about the transactions listed below. a....

1. Think about the transactions listed below. a. A company obtains a $10,000 loan from a bank. b. A company purchases $15,000 of inventory from its suppliers. They paid $5,000 toda

Financial statements, Describe the following questions:- Q.1 Explain how...

Describe the following questions:- Q.1 Explain how financial statements assist in the capital allocation process. How are financial statements limited? Which financial statement

Calculate the weighted average cost, The following information is available...

The following information is available about the capital structure of Cheng & Davis Development (CDD). Capital Structure Current Target

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd