SOLUTION: Actualy it is question of ecnomic so plz solve it.. 1.A finance company advertises two investment plans. In plan 1 the company pays Rs. 22,000 after 15 years for ev

Question 1010667: Actualy it is question of ecnomic so plz solve it..
1.A finance company advertises two investment plans. In plan 1 the company pays Rs. 22,000 after 15 years for every Rs.1,000 invested now. In plan 2, for every Rs. 1,000 invested the company pays Rs. 4,000 at the end of the 10th year and Rs. 4,000 at the end of 15th year. Select the best investment plan at i = 10% compounded annually.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
1000 invested today in both plans so that can be effectively ignored because it will cancel out in a plan 1 versus plan 2 comparison.

plan 1 give you 22000 at the end of the 15th year.
at 10% discount rate, the present value is 5266 truncated to the nearest integer.

plan 2 gives you 4000 at the end of the 10th year and 4000 at the end of the 15th year.
at 10% discount rate, the present value is 2499 truncated to the nearest integer.

they're not even close.
the 22000 at the end of the 15th year is a clear winner.

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