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

Option 1:

I = 38.2%

FV = CCF*[{(1+i/m) ^m*n -1}/ (i/m)]

1500000 = 9000*[{(1+.382/2) ^2*10 - 1}/ (.382/2)]

1500000 = 9000* [{(1.191) ^20 -1}/.191]

1500000 = 9000*{(32.978-1)/.191}

1500000 = 9000*{(31.9788)/.191}

1500000 = 9000*167.43

1500000 = 1506854

This shows that 38.2% is the rate which the Bank A assumed. 

Option 2:

I = 53.25%

FV = CCF*[{(1+i/m) ^m*n -1}/ (i/m)]

1500000 = 2000*[{(1+.5325/3) ^3*10 - 1}/ (.5325/3)]

1500000 = 2000* [{(1.1775) ^30 -1}/.1775]

1500000 = 2000*{(134.53-1)/ .1775}

1500000 = 2000*{(133.53)/. 1775}

1500000 = 2000*752.28

1500000 = 1504560

This shows that 53.25% is the rate which the Bank B assumed. 

(c)

The most favorable option is 53.25% interest rate which the bank B is assuming because only the 2000 has to be given at after every four months, which is the fewer amount than the bank A is charging.

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