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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
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Calculation of Cash Down Price of House
Given Information
- Cash down payment = Rs 20000
- Annual payment for 25 years = Rs 4000
- Interest rate = 5% p.a. compounded annually
Calculation of Future Value of Annuity
The annual payment of Rs 4000 is an annuity. We can calculate the future value of this annuity at the end of 25 years using the following formula:
FV = A * [(1 + r)^n - 1] / r
- A = Annual payment = Rs 4000
- r = Interest rate = 5% p.a.
- n = Number of years = 25
Putting these values in the formula, we get:
FV = 4000 * [(1 + 0.05)^25 - 1] / 0.05
FV = Rs 183,858.78
Calculation of Cash Down Price
The cash down price is the present value of the house. We can calculate it using the following formula:
PV = FV / (1 + r)^n
- FV = Future value of annuity = Rs 183,858.78
- r = Interest rate = 5% p.a.
- n = Number of years = 25
Putting these values in the formula, we get:
PV = 183858.78 / (1 + 0.05)^25
PV = Rs 45,840.25
Explanation
The cash down price of the house is Rs 45,840.25. The buyer paid Rs 20,000 as down payment and Rs 4000 at the end of each year for 25 years. The total amount paid by the buyer over 25 years is:
Total amount paid = Down payment + Annual payment * Number of years
Total amount paid = 20000 + 4000 * 25
Total amount paid = Rs 120,000
Therefore, the buyer paid Rs 120,000 for a house that is worth Rs 45,840.25. The rest of the amount paid by the buyer is the interest charged on the annuity payments over 25 years.
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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
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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 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 is 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 is.
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 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 is 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 is.
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