Question

A certain property was offered in an instalment basis with no down payment for six years. However, the buyer needs to pay immediately a beginning of a monthly payment for a period of two years starting at an amount of P 4, 500 and succeeding monthly payments increases by P 800 until the last monthly payment. After such, payments become an end of a quarterly payments starting at an amount of P 25, 000 for the remaining period in which quarterly payments decreases by 6% every quarter thereof until the last quarterly payment. Money is 14% effective. (Please draw a cash flow diagram)

a) What was the cash price of the said property?

b) What equivalent uniform end of a semi-annual amounts would the payments be instead of the said condition above?

c) Find the sum of all the payments being made.

d) If after three years of payments, the buyer wishes to pay a single amount in order to settle all of his remaining obligations, how much would it be?

Answer 1

The interest on an amortized loan is calculated based on the most recent ending balance of the loan; the interest amount owed decreases as payments are made. This is because any payment in excess of the interest amount reduces the principal, which in turn, reduces the balance on which the interest is calculated.

A.the cash transaction beyond the limit is done, then a penalty of an amount equal under Section 271 D of Income Tax Act will be imposed on a seller who accepts cash or refund of advance is made in cash by the seller of the property. ... The notices will be sent to both the seller and the purchaser.

B. The annual worth is the net of all the benefits and costs incurred over a one-year period. This virtual number is called the equivalent uniform annual worth (EUAW) and is equal to the total benefit and cost of the system as if it was spread evenly throughout the years of its life

C. Let’s say you just graduated from college and you’re going to work for a few years, but your dream is to own your own business. You have some money now, but you don’t know how much, if any, you will be able to save before you buy your business in five years.

D. As shown in the example the future value of a lump sum is the value of the given investment at some point in the future. It is also possible to have a series of payments that constitute a series of lump sums. Assume that a business receives the following four cash flows