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

Evaluate the earnings per share, Q. A ltd. Company has equity share capital...

Q. A ltd. Company has equity share capital of Rs. 5,00,000 divided into shares of Rs. 100 each. It wishes to gain further Rs. 3,00,000 for expansion cum modernization plans. The co

The functional currency method-foreing branches, The functional currency me...

The functional currency method (formerly temporal method) Under this method, the branch is considered to be an extension of the head office and this is reflected by the trading

T account, I've tried everything im just really lost. I have to enter into ...

I've tried everything im just really lost. I have to enter into T accounts. Common stock $5 stated value (900,000 shares authorized, 620,000 shares issued)................. $3,100,

Illustration for preparing final accounts, Illustration for preparing final...

Illustration for preparing final accounts K Ltd established a branch in Arusha Tanzania on 1.1.X2, when Kshs 1 = TShs 15. PPE costing Kshs 800,000 were purchased on that day. I

Landlord''s right of distress-bankruptcy, LANDLORD'S RIGHT OF DISTRESS ...

LANDLORD'S RIGHT OF DISTRESS The Landlord's right to distrain for arrears of rent is not lost on the tenant's bankruptcy, but 1) Distress can only be levied after commencement

Accounting policies-notes to the accounts, Accounting Policies These fina...

Accounting Policies These financial statements have been prepared under the historical cost basis of accounting which is modified to accommodate the revaluation of certain proper

Economic substance, economic substance as in recognition of revenue

economic substance as in recognition of revenue

Weighing up the costs and benefits, Weighing up the costs and benefits ...

Weighing up the costs and benefits You may feel that, when considering a piece of accounting information, provided four main qualities identified are present and it's material

Bill Receivable, What is the function of bill receivable? What is the meani...

What is the function of bill receivable? What is the meaning of bill receivable?

Accounting concepts, What is implication of applying accounting concepts wr...

What is implication of applying accounting concepts wrongly.

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