Q: # 1

Ans:
a) One asset is increases and the other one is decreases. Stock of the firm increase and cash of the firm decrease. b) One asset is increases and the other one is decreases. Account Receivables increase of the firm and cash of the firm decrease. c) Stock of the firm decrease and cash outflow increase. d) One asset is increases and the other one is decreases a. The firm face the expanses in the shape of land depreciation by 100,000 cash of company decrease. e) The stock of the company increase and cash outflow occur. f) The firm expanses increase in the shape of dividend, cash decrease. g) The firm long term debts increase and cash of firm increase, this is cash inflow.

Q: # 2
Ans:
Annuity: 1) A fixed sum of money paid to someone each year, typically for the rest of their life. 2) A form of insurance or investment entitling the investor to a series of annual sums. e.g=

after 3 years 300 This series will reduce your purchasing power, if lump sum payment received now than your purchasing power will increase.

Q#3 Ans:
Amortization schedule:
A table which shows the repayment schedule of principal amount and interest amount. Amortization mean just to kill or real meaning have is pay off. Amortization is intangible assets but depreciation on fixed assets.

1 years

2 Beginning balance

3 Installment payments

4 Interest amount

5 Principal payment

6 Ending balance

Installment payments:- Installment payment calculate with the help of this formula

Interest amount:- Interest amount calculate with beginning balance multiply with given rate of interest. Principal repayment:- Principal repayment calculate with installment payment and interest amount. (Installment payment interest amount = principal amount) Ending balance:- Ending balance calculate with the beginning balance and principal repayment. (Beginning balance principal repayment=ending balance)

Q #4.. Ans:
FV PV n i = 10, 00,000 = 250,000 = 18 =?

FV

= PV (1+i) n

10, 00,000=250,000(1+i) 18 10, 00,000/250,000 = (1+i) 18 4 = (1+i) 18 Taking under rot on both size i = 8.006%

Q #5.. Ans:
a) if n =20

FVA=R*[(1+i) n 1 / i]

FV = 6000[(1+0.13)20-1/.013] FV = 485680

b) If n = 30

FVA=R*[(1+i) n 1 / i]

FV = 6000[(1+0.13)30-1/0.13] FV = 1759195

Q # 7.. Ans:
PV i N = 500 = 12% =5

FV
(i)

=?

Annually FV = PV (1+i) n FV = 500 (1+0.12)5 FV = 881

(ii)

Semi annually FV = PV (1+i/m) n*m FV = 500 (1+0.12/2)5*2 FV =895

(iii)

Quarterly FV = PV (1+i/m) n*m FV = 500 (1+0.12/4)5*4 FV =903

(iv)

Monthly

FV = PV (1+i/m) n*m FV =500 (1+0.12/12)5*12 FV =908

Q # 8. PV Ans:
Face value n kd Coupon rate = 10,000 = 10 = 15% = 10% Calculation for cash flow: C.F= fv *c.r C.F= 10,000*0.1 C.F=1000

=?

PV =C.F [1-1/ (1+kd)n/kd] +MV/ (1+kd)n PV =100 [1-1/ (1+0.15)10/0.15] +10,000/ (1+0.15)10 PV =5019+2472 PV= 7491

FUTURE VALUE OF BOUND IS GREATER THAN PRESENT VALUE OF BOUND FV > PV

Yes I will purchase the bond because it is a discount bound and will be sale less than from its face value.