INTERPRETATION: The sum after 4 years will be Rs 15689.88 4. Suppose a machine is expected to last 8 years and its replacement price is estimated at Rs 5000. What annual provision must be made to ensure sufficient funds are available if money can be invested at 8% per annum? Excel can be used to solve this problem by making use of PMT function FUNCTION: ==PMT(interest_rate, number_payments,pv,fv,type) interest rate= 8% per annum number_payments =8 years PV= 0.The PV is zero in the Excel function since we start with zero initial investment. FV=-Rs5000 .The FV is negative in the Excel function since we will remove the Rs 5000 ( Cash outflow) type=0 . The payment is made at the beginning of the period. INTERPRETATION: Annual deposit Rs 470.07 will need to be made at the end of the year for 8 years
INTERPRETATION: The sum after 4 years will be Rs 15689.88 4. Suppose a machine is expected to last 8 years and its replacement price is estimated at Rs 5000. What annual provision must be made to ensure sufficient funds are available if money can be invested at 8% per annum? Excel can be used to solve this problem by making use of PMT function FUNCTION: ==PMT(interest_rate, number_payments,pv,fv,type) interest rate= 8% per annum number_payments =8 years PV= 0.The PV is zero in the Excel function since we start with zero initial investment. FV=-Rs5000 .The FV is negative in the Excel function since we will remove the Rs 5000 ( Cash outflow) type=0 . The payment is made at the beginning of the period. INTERPRETATION: Annual deposit Rs 470.07 will need to be made at the end of the year for 8 years
bs_lab_.knreddy.docx