Reference no: EM131134921
Assignment- Time value of money
Laxmi Silwal inherited a property from her grandparents few decades ago and since then the value of the property has been gradually increasing. She in planning to sell the property so she can buy a new house by the bay area. She is considering several offers for the property and several saving plans.
(i) The first offer is a single lump sum amount of $600,000 to be received on 1 st January 2017. Laxmi will deposit the amount in a savings account in Commonwealth bank earning 4.25% per annum. If she accepts this offer, how much money will she have in her account at the end of 2020?
(ii) The second offer is a single lump sum amount of $600,000 to be received on 1 st January 2017. Laxmi will deposit the amount in a savings account in Commonwealth bank earning 4% per annum, compounding half yearly. If she accepts this offer, how much money will she have in her account at the end of 2020?
(iii) The third offer is a series of four annual payments on 1 st January 2017, 2018, 2019 and 2020 of $350,000, $120,000, $100,000 and $50,000. Laxmi will deposit all payments received in a savings account in Commonwealth bank earning 4% per annum. If she accepts this offer how much willshe have saved at the end of 2020?
(iv) The fourth offer is a series of four equal annual payments of $140,000 on 1 st January 2017, 2018, 2019 and 2020. Laxmi will deposit all payments received in a savings account in Commonwealth bank earning 4% per annum. If she accepts this offer how much will she have saved at the end of 2020?
(v) If Laxmi accepts the second offer for 4 years, what is the effective annual rate of Return?
(vi) Which option will Laxmi choose, and why?
Academic requirements:
• Student declaration must be completed.
• The entire assignment brief and completed .
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Time value of money
: Laxmi Silwal inherited a property from her grandparents few decades ago and since then the value of the property has been gradually increasing. She in planning to sell the property so she can buy a new house by the bay area. She is considering severa..
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