Re: :::|| VU Askari ||::: MGT201-An Idea Solution pls discuss it with me

Brother u forgot to divide it by i/m. after dividing by i/m we get different answers and i think they are right. i thought so because in ur case the bank B has less interest rate and we are also paying less money. just think for a moment that with less payment and less interest rate how can we get the same answers.
my solution is as follows:

Bank A

1,500,000 = 9000 {[(1+i/2)^10x2)-1]/(i/2)}

i= 38.125%

 

Bank B

1,500,000 = 2000 {[(1+i/3)^10x3)-1]/(i/3)}

i= 53.204%

and off course bank b is the rite choice.

 

On Tue, Apr 27, 2010 at 7:14 AM, mc090402550 Asad Munir <mc090402550@vu.edu.pk> wrote:

Your father is 50 years old now and his plan is to retire exactly at the age of 60. His goal is to create a fund that will allow him to receive Rs15,00,000 at the time of retirement so that he can start a small business. He has searched the market and is confused between the two options:

• Option 1: To deposit Rs.9,000 after every 6 months in banks A
• Option 2: To deposit Rs.2,000 after every 4 months in banks B

Both banks assume payments at the end of respective months. As a business graduate, you have been asked to help him out as:

What interest rate assumption has the Bank A used in its offer?

What interest rate assumption has the Bank B used in its offer?

Which option is favorable?

Dear fellows here is the formula but i m not 100% sure. i hv solved this question in excel. and the answer is:

 

1,500,000 = 9000 [(1+i/2)^10*2-1] 19%

1,500,000 = 2000 [(1+i/3)^10*3-1] 18%

According to this formulas option B is Favourable cose we have to pay less amount and get the same result.

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