Accounting and Finance

Running head: ACCOUNTING AND FINANCE
Accounting and Finance
Name of the Student:
Name of the University:
Author’s Note:

1ACCOUNTING AND FINANCE
Table of Contents
Answer to question 1:.................................................................................................................2
Sub part (a):............................................................................................................................2
Sub part (b)-i:.........................................................................................................................2
Sub part (b)-ii:........................................................................................................................2
Sub part (c)-i:.........................................................................................................................3
Sub part (c)-ii:........................................................................................................................3
Answer to question 2:.................................................................................................................4
Sub part (i):............................................................................................................................4
Sub part (ii):...........................................................................................................................4
Answer to question 3:.................................................................................................................5
Sub part (i):............................................................................................................................5
Sub part (ii):...........................................................................................................................5
Sub part (iii) and (iv):.............................................................................................................6
Sub part (v):............................................................................................................................6
Sub part (vi):..........................................................................................................................7
Sub part (vii), (viii) & (ix):....................................................................................................7
Sub part (x):............................................................................................................................8
Sub part (xi):..........................................................................................................................8
Sub part (xii):.........................................................................................................................9
Sub part (xiii):........................................................................................................................9

2ACCOUNTING AND FINANCE
Sub part (xiv):........................................................................................................................9
Sub part (xv):........................................................................................................................10
Sub part (xvi):......................................................................................................................10
References and bibliography:...................................................................................................11

3ACCOUNTING AND FINANCE
Answer to question 1:
Sub part (a):
Computation of monthly deposits to accumulate fund for
holyday:
Present Value 0
Annual Interest rate 6.00%
Monthly Interest rate 0.50%
No of months 15
Future Value 20000
Monthly deposit $1,287
Sub part (b)-i:
End of year Cash flow
($,000) PV factor @15% pa Present Values
0 -16000 1.00000 -16000
1 -2,500 0.86957 -2174
2 0 0.75614 0
3 5,000 0.65752 3288
4 6,800 0.57175 3888
5 7,000 0.49718 3480
6 7,000 0.43233 3026
7 9,500 0.37594 3571
8 5,500 0.32690 1798
9 2,000 0.28426 569
10 -4,500 0.24718 -1112
Net Present
Value 334
It can be seen from the above table that, the investment is having a positive net
present value of $334,000 and hence the investment should be purchased.
Sub part (b)-ii:
End of year Cash flow
($,000)
PV factor
@15% pa
Present
Values
0 -16000 1.32250 -21160
1 -2,500 1.15000 -2875
2 0 1.00000 0