1. When payment is made online, the discount offered is 10%. An additional discount of 10% isgiven to SBI credit card holders. Ganesh buys a phone of Rs. 15000 by paying online andthrough his SBI credit card. How much does he need to pay?A. Rs. 12250B. Rs. 12150C. Rs. 12500D.Rs. 12750
Answers
Answer:
A company “A” wants to buy another company “B.” Before buying, company “A” looks for the projection of company “B” for the coming 10 years.
Solution: The cost to buy company “B” at the present time – Rs. 1,000,000
The present value of cash flows for 10 years are as follows.
Year 1: Rs. 200,000
Year 2: Rs. 150,000
Year 3: Rs. 100,000
Year 4: Rs. 75,000
Year 5: Rs. 70,000
Year 6: Rs. 55,000
Year 7: Rs. 50,000
Year 8: Rs. 45,000
Year 9: Rs. 30,000
Year 10: Rs. 10,000
Total: Rs. 785,000
The total cash flow for the coming 10 years is now in the bucket. Therefore, we can simply use the formula to calculate the net present value.
Net Present Value: Rs. 785,000 – Rs. 1,000,000 = Rs. -215,000
The negative value indicates that it might not be a wise idea for company “A” to but company “B.”
Step-by-step explanation: