Practice Exercise 4: Ahmed is offered OMR. 5000 four years from now or OMR. 4000 in cash today. Suggest Ahmed as to what should he choose a) b) What is the present value of the 5000 if you assume an interest rate of 5.25%? Which of the two offers should he accept?
Practice Exercise 4: Ahmed is offered OMR. 5000 four years from now or OMR. 4000 in cash today. Suggest Ahmed as to what should he choose a) b) What is the present value of the 5000 if you assume an interest rate of 5.25%? Which of the two offers should he accept?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Practice Exercise 4: Ahmed is offered OMR. 5000 four years from now or OMR. 4000 in cash today. Suggest
Ahmed as to what should he choose
a)
What is the present value of the 5000 if you assume an interest rate of 5.25%?
b)
Which of the two offers should he accept?
Practice Exercise 5: Fatema wants to invest an amount of OMR. 2000 every year to go on vacations with her
husband at the end of 5 years. For this purpose, she wants to invest some money in a saving bank but does not
know the exact amount of money she will get after 5 years
a)
What amount will she receive assuming an interest rate of 7.85%?
b)
What amount will she receive assuming an interest rate of 7.50%?
Suggest the option which will be enough to meet her travel expenses estimated to be 12000?
Practice Exercise 6: Salama wants to buy a car worth OMR. 10000, for which she has been saving and investing in
c)
bond an amount of OMR. 1100 each year for the last 10 years. She is willing to withdraw and buy a new car today;
but does not know the exact amount of money she will get it.
a)
What amount will she receive assuming an interest rate of 7.75%?
b)
What amount will she receive assuming an interest rate of 8%?
c)
Suggest which option will help her in a better way to buy the Car worth OMR. 10000?
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