Calculate this pblem plz

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 November 2009 Three options – exercise on buying an asset (Blackberry costing Rs.22000/- now) using three approaches.

1st option is : -

a) Rs.22000 cash down now
b) our saving Rs.500 every month
c) Our investment Rs.500 every month for 36 months
d) We will get a return at the end of 36 months based on our expected monthly rate of return determined by us.
= P + R where P is Principal & R is our expected monthly rate compounded for 36 months

2nd option is : -

a) We pay down payment Rs.10000
b) We pay EMI Rs.500 for 36 months
c) We invest Rs.12000 @ our expected rate of return for 3 years
d) We get P1 + R1 compounded for 3 years @ our yearly expected rate

3rd option is : -

a) We pay down payment Rs.10000
b) We pay EMI Rs.500 for 36 months
c) We invest Rs.12000 for 3 years with the dealer who is selling the asset to us
d) We get Rs.22000 from the dealer at the end of 3 years

Calculate: - Monthly expected rate

CA Deepak S

CA Deepak S (Expert)
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14 November 2009 According to my calculations the third option seems to be the better one

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