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A TV can be purchased by paying Rs. 10,000 now and Rs.20000 , Rs. 50000 , Rs.90000 , Rs. 80000 at the end of years 1 , 2 , 3 , 4 respectively . Find the cash down price of TV if money is 12% effective?
Most Upvoted Answer
A TV can be purchased by paying Rs. 10,000 now and Rs.20000 , Rs. 5000...
Solution:

Given:
Cash down payment = Rs. 10,000
Amount paid at the end of year 1 = Rs. 20,000
Amount paid at the end of year 2 = Rs. 50,000
Amount paid at the end of year 3 = Rs. 90,000
Amount paid at the end of year 4 = Rs. 80,000
Money is 12% effective

To find: Cash down price of TV

Calculation:
Step 1: Calculate the present value of all the future payments using the formula
Present value = Future value / (1 + r)t
Where,
r = Rate of interest
t = Time period

Present value of payment at the end of year 1 = 20,000 / (1 + 0.12)1 = Rs. 17,857.14
Present value of payment at the end of year 2 = 50,000 / (1 + 0.12)2 = Rs. 35,714.29
Present value of payment at the end of year 3 = 90,000 / (1 + 0.12)3 = Rs. 58,659.79
Present value of payment at the end of year 4 = 80,000 / (1 + 0.12)4 = Rs. 49,261.02

Step 2: Add up all the present values to get the total present value of future payments
Total present value of future payments = 17,857.14 + 35,714.29 + 58,659.79 + 49,261.02 = Rs. 161,492.24

Step 3: Add the cash down payment to the total present value of future payments to get the cash down price of TV
Cash down price of TV = 10,000 + 161,492.24 = Rs. 171,492.24

Therefore, the cash down price of TV is Rs. 171,492.24 when money is 12% effective.

Note: The present value of future payments is calculated using the time value of money concept, which states that money today is worth more than money in the future due to its potential earning capacity. The formula used in this solution is a basic formula for present value calculation and does not take into account any additional factors such as inflation or taxes.
Community Answer
A TV can be purchased by paying Rs. 10,000 now and Rs.20000 , Rs. 5000...
Rs. 1,82,618
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A TV can be purchased by paying Rs. 10,000 now and Rs.20000 , Rs. 50000 , Rs.90000 , Rs. 80000 at the end of years 1 , 2 , 3 , 4 respectively . Find the cash down price of TV if money is 12% effective?
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