Compare the present value of single sum with present

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Reference no: EM132652084

Puan Norsuhaida, a finance lecturer, has invested RM50,000 in a parcel of land that is expected to increase in value by 12 per cent per year for the next five years. She plans to sell it and provide herself with a 10-year annuity.

Required:

(i) By using the time value of money theory, explain why the parcel of land can increase in value.

(ii) Calculate how much will this annuity be if the interest rate is 12 per cent per annum.

(c) Explain which option would you prefer as an investor if you have a choice of daily, monthly or quarterly compounding of interest.

(d) List FIVE (5) different financial applications of the time value of money.

(e) Compare the present value of a single sum with the present value of an annuity.

Reference no: EM132652084

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