Wong plan to schedule some maintenance works towards his 10 storey office building in 2026. The cost is estimated at RM150,000. Calculate the amount that should be set aside or saved each year if the investment was made at the end of each year. Compound interest at the time was at 8%.

Wong plan to schedule some maintenance works towards his 10 storey office building in 2026. The cost is estimated at RM150,000. Calculate the amount that should be set aside or saved each year if the investment was made at the end of each year. Compound interest at the time was at 8%.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Wong plan to schedule some maintenance works towards his 10 storey office
building in 2026. The cost is estimated at RM150,000. Calculate the amount
that should be set aside or saved each year if the investment was made at the
end of each year. Compound interest at the time was at 8%.

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