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Mr. Zaid has a choice between receiving Rs. 1,000,000 from his great-uncle one year from today or Rs. 900,000 from his great-aunt today. He believes
Mr. Zaid has a choice between receiving Rs. 1,000,000 from his great-uncle one year from today or Rs. 900,000 from his great-aunt today. He believes he could invest the Rs. 900,000 at a one-year return of 12%. a) What is the future value of the gift from his great-uncle upon receipt? From his great- aunt? Which gift should he choose? b) At what rate is he indifferent? c) How does your answer change in part (a) if there is tax on interest income at the rate 15%? d) A new bond of Rs. 900,000 is currently issued for one year, that guarantee you to pay every month Rs. 8500. Is this investment worthy
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