Rex is contemplating several monetary transactions. He has sought your advice for his various queries. (Formula and interest rate factors are provided for this question). You are required to advise him on the following situations: (a) He just purchased a flat for Rs70,000 and hopes to move into a single-family house in five years. How much will the flat be worth in five years if house prices are expected to rise by 8 per cent per annum?

(2 marks) (b) He has inherited Rs6 million. He would like to use this money to invest in a new project costing Rs 7 million in two years from now. Will he have enough money to invest in the new project if he deposits his money in an account paying 8 per cent compounded semi-annually?

(3 marks) (c) How much he must invest today if he anticipates to receive Rs79,000 in 15 years, assuming an opportunity cost of 14 %?

(2 marks) (d) He has deposited Rs23,000 today in an account which will earn 5 % semi-annually. He plans to leave the funds in this account for seven years earning interest. If the goal of this deposit is to cover a future obligation of Rs50,000, what recommendation would you make to Rex?

(5 marks) (e) Rex intends to deposit Rs5,000 each year for eight years, at 6 % per year. He wants to know of the future value of the annuity.

(2 marks) (f) A stationery dealer offers to lease a photocopier to Rex for Rs500 per month for two years. At the end of two years, Rex has the option to buy the photocopier for Rs5,000. Rex will pay at the end of each month. The stationery dealer also offers to sell the same photocopier to Rex for Rs12,000 cash, now. If the current interest rate is 12 %, which is the better offer? (9 marks) (g) How much he will receive if Rs4,600 is deposited today at 9 % for three years, out of his private funds.