Solution:

Present value , PV = Future value, FV (1+r)^t

1,68,000 = 1,10,000 * (1+r)^3
(1+r)^ 3 = 0.65476
Rate of return,r = -13.17%

Solution:
Case 1: if he pays $10 per week for next 12 weeks
Case 2: if he buys the case today, he pays $108 today
It would be a annuity due case, where he pays $10 every week.
So, present value = 108
108 = 10 * (1/r – (1/r * (1+r)^12))
r (weekly interest) = 0.0197
Annual rate of interest = (1+0.019763989)^52 – 1
= 176.68%

Per year Annuity Amount = $ 55,00

Discount rate, r = 8%
Present value of annuity at end of 3rd year = 55,000 * (1/r – (1/r * (1+r)^223))
= $ 57,040.82
Present value (today) = present value at end of 3 rd year / (1+r)^3
= $ 48,903.31

Solution
Solution

Per year Annuity Amount = $ 6,175

Discount rate, R = 11% per annum,
Annual effect discount rate ,ER = ((1+11/12)^12 – 1) = 11.5719%
Semi Annual effect discount rate ,r = 5.7859%
Present value of annuity at 9th year beginning , PV9 = 6,175 * (1/r – (1/r * (1+r)^10))
= $ 45,913.03
Present value at 5th year beginning, PV5 = present value at 9th year, PV9 / (1+ER)^4
= $ 29,629

Present value at 3rd year beginning, PV3 = present value at 5 th year, PV5 / (1+ER)^2
= $ 23,801.66

Present value today, PV0 = present value at 3 rd year, PV3 / (1+ER)^3

= $ 17,137,33

Solution

Case 1 : When he takes loan to purchase it

After selling it, money he has total paid for car = 30,665-17000= $13,665

Case 2 : When he takes it on lease

To make it indifferent, if after selling car, he would have paid $ 17335.
Car sale value = 30,665 – 17335 = $12,930

Solution

Present value today of deposits done = 11,000 + 11,000 * annuity factor for next 5 intallments
= 11,000 + 11,000 * (1/r – (1/r * (1+r)^5))

Present value when she is 18th years of all 25,000 receipts of payment
= 25,000 + 25,000 * annuity factor of next 3 receipt payements
= 25,000 + 25,000 * (1/r – (1/r * (1+r)^3))
To equate these two , Will need to calculate present value (when she is of 12 years)
= 25,000 + 25,000 * (1/r – (1/r * (1+r)^3)) / (1+r)^6

Equating LHS = RHS

11,000 + 11,000 * (1/r – (1/r * (1+r)^5)) = 25,000 + 25,000 * (1/r – (1/r * (1+r)^3)) / (1+r)^6
Hence, r = 8.54%

Solution

Case 1 – 20,000 annual perpetuity

Rate = present value / capital
Present Value = 20,000 * r

Case 2 – 34,000 annual annuity plan

Present Value = 34,000 * (1/r – (1/r * (1+r)^10))

By equating both sides present value

r =9.27%