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A person bought a house paying Rs. 20000 cash down and Rs. 4000 at the end of each year for 25 yrs. At 5% p.a. C.I. The cash down price is
- a)Rs. 75000
- b)Rs. 76000
- c)Rs. 76392
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
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A person bought a house paying Rs. 20000 cash down and Rs. 4000 at the...
Calculation of Cash Down Price:
Using the formula for the present value of an annuity with continuous compounding, we can calculate the value of the 25-year payment stream:
PV = (A/i)(1 - (1/(1+i)^n))
where A = 4000, i = 0.05, and n = 25
PV = (4000/0.05)(1 - (1/(1+0.05)^25)) = Rs. 63202.69
Adding the initial cash down payment of Rs. 20000, we get the total cash down price:
Total Cash Down Price = Rs. 20000 + Rs. 63202.69 = Rs. 83202.69
Therefore, option C, Rs. 76392, is incorrect.
Explanation:
The given problem involves the calculation of the cash down price of a house that is paid for with an initial cash down payment and an annuity payment stream over a period of 25 years, with continuous compounding at a rate of 5% p.a.
To solve the problem, we first use the formula for the present value of an annuity with continuous compounding to calculate the value of the payment stream over 25 years. We then add the initial cash down payment to this value to get the total cash down price of the house.
It is important to note that the options provided in the problem are not correct, and the correct answer is option C, Rs. 83202.69.
Using the formula for the present value of an annuity with continuous compounding, we can calculate the value of the 25-year payment stream:
PV = (A/i)(1 - (1/(1+i)^n))
where A = 4000, i = 0.05, and n = 25
PV = (4000/0.05)(1 - (1/(1+0.05)^25)) = Rs. 63202.69
Adding the initial cash down payment of Rs. 20000, we get the total cash down price:
Total Cash Down Price = Rs. 20000 + Rs. 63202.69 = Rs. 83202.69
Therefore, option C, Rs. 76392, is incorrect.
Explanation:
The given problem involves the calculation of the cash down price of a house that is paid for with an initial cash down payment and an annuity payment stream over a period of 25 years, with continuous compounding at a rate of 5% p.a.
To solve the problem, we first use the formula for the present value of an annuity with continuous compounding to calculate the value of the payment stream over 25 years. We then add the initial cash down payment to this value to get the total cash down price of the house.
It is important to note that the options provided in the problem are not correct, and the correct answer is option C, Rs. 83202.69.
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A person bought a house paying Rs. 20000 cash down and Rs. 4000 at the end of each year for 25 yrs. At 5% p.a. C.I. The cash down price isa)Rs. 75000b)Rs. 76000c)Rs. 76392d)None of theseCorrect answer is option 'C'. Can you explain this answer?
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A person bought a house paying Rs. 20000 cash down and Rs. 4000 at the end of each year for 25 yrs. At 5% p.a. C.I. The cash down price isa)Rs. 75000b)Rs. 76000c)Rs. 76392d)None of theseCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A person bought a house paying Rs. 20000 cash down and Rs. 4000 at the end of each year for 25 yrs. At 5% p.a. C.I. The cash down price isa)Rs. 75000b)Rs. 76000c)Rs. 76392d)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A person bought a house paying Rs. 20000 cash down and Rs. 4000 at the end of each year for 25 yrs. At 5% p.a. C.I. The cash down price isa)Rs. 75000b)Rs. 76000c)Rs. 76392d)None of theseCorrect answer is option 'C'. Can you explain this answer?.
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