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(a) A company wants to purchase a plant for its expanding operations. The desired plant is available at Rs 300,000 in cash. Alternatively, the company has the option of purchasing the plant at a total cost of Rs 450,000, to be paid in 5 equal annual instalments due at the end of each year. Assuming the required rate of return is 15%, which option should the company exercise?

(b) The rate of interest is 8 percent. What will Rs 100,000 be worth in three years' time using

(i) Simple interest?
(ii) Annual compound interest?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9588109

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