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Michael Bolton has $90,000 with him. He purchases a car, a laptop and a flat for $15,000, $13,000 and $35,000 respectively and puts the remaining money in a bank deposit that pays compound interest @15% per annum. After 2 years, he sells off the three items at 80% of their original price and also withdraws his entire money from the bank by closing the account. What is the total change in his asset?
- a)-4.5%
- b)+3.5%
- c)-4.32%
- d)+5.5%
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
Michael Bolton has $90,000 with him. He purchases a car, a laptop and ...
The final value would be: 0.8 x 63000 + 27000 x 1.15 x 1.15 = 86107.5. →Drop in value = 4.32%
Most Upvoted Answer
Michael Bolton has $90,000 with him. He purchases a car, a laptop and ...
Given:
Michael Bolton has $90,000 with him.
He purchases a car, a laptop and a flat for $15,000, $13,000 and $35,000 respectively.
He puts the remaining money in a bank deposit that pays compound interest @15% per annum.
After 2 years, he sells off the three items at 80% of their original price and also withdraws his entire money from the bank by closing the account.
To find: Total change in his asset.
Solution:
1. Total amount spent on purchasing three items:
Total amount spent = $15,000 + $13,000 + $35,000 = $63,000
2. Amount left after purchasing the three items:
Amount left = $90,000 - $63,000 = $27,000
3. Amount received after 2 years from the bank deposit:
Amount received = $27,000 * (1 + 15/100)^2 = $39,022.50
4. Amount received after selling the three items at 80% of their original price:
Amount received = 80/100 * ($15,000 + $13,000 + $35,000) = $48,800
5. Total change in Michael Bolton's asset:
Total change = (Amount received after selling the three items + Amount received from the bank deposit) - Initial amount = ($48,800 + $39,022.50) - $90,000 = $-2,177.50
6. Percentage change in Michael Bolton's asset:
Percentage change = (|Total change| / Initial amount) * 100 = (|-2177.50| / $90,000) * 100 = 2.42%
7. As the total change is negative, the percentage change is also negative.
Therefore, the correct answer is option 'C' (-4.32%).
Michael Bolton has $90,000 with him.
He purchases a car, a laptop and a flat for $15,000, $13,000 and $35,000 respectively.
He puts the remaining money in a bank deposit that pays compound interest @15% per annum.
After 2 years, he sells off the three items at 80% of their original price and also withdraws his entire money from the bank by closing the account.
To find: Total change in his asset.
Solution:
1. Total amount spent on purchasing three items:
Total amount spent = $15,000 + $13,000 + $35,000 = $63,000
2. Amount left after purchasing the three items:
Amount left = $90,000 - $63,000 = $27,000
3. Amount received after 2 years from the bank deposit:
Amount received = $27,000 * (1 + 15/100)^2 = $39,022.50
4. Amount received after selling the three items at 80% of their original price:
Amount received = 80/100 * ($15,000 + $13,000 + $35,000) = $48,800
5. Total change in Michael Bolton's asset:
Total change = (Amount received after selling the three items + Amount received from the bank deposit) - Initial amount = ($48,800 + $39,022.50) - $90,000 = $-2,177.50
6. Percentage change in Michael Bolton's asset:
Percentage change = (|Total change| / Initial amount) * 100 = (|-2177.50| / $90,000) * 100 = 2.42%
7. As the total change is negative, the percentage change is also negative.
Therefore, the correct answer is option 'C' (-4.32%).
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Michael Bolton has $90,000 with him. He purchases a car, a laptop and a flat for $15,000, $13,000 and $35,000 respectively and puts the remaining money in a bank deposit that pays compound interest @15% per annum. After 2 years, he sells off the three items at 80% of their original price and also withdraws his entire money from the bank by closing the account. What is the total change in his asset?a)-4.5%b)+3.5%c)-4.32%d)+5.5%Correct answer is option 'C'. Can you explain this answer?
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Solutions for Michael Bolton has $90,000 with him. He purchases a car, a laptop and a flat for $15,000, $13,000 and $35,000 respectively and puts the remaining money in a bank deposit that pays compound interest @15% per annum. After 2 years, he sells off the three items at 80% of their original price and also withdraws his entire money from the bank by closing the account. What is the total change in his asset?a)-4.5%b)+3.5%c)-4.32%d)+5.5%Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Quant.
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