Answer:
The correct response is "$20906.15".
Explanation:
Mr. Rafiq assigns Rs. 7000 should Mr. Ahmed to have been attributable throughout five years as well as Rs. 15000 to have been expected within seven and a half years.
Interest rate is,
r = 8%
Therefore at that age of 6 years, every single transaction becoming FV with payment after five years probably PV of compensation at 7 ½ years.
Now,
At year 6, the single payment will be:
= [tex]CF5\times (1+\frac{r}{2})^{2\times 1} + \frac{CF6}{(1+\frac{r}{2})^}{2\times 1.5}[/tex]
At year 6, the payment will be:
= [tex]7000\times (1+\frac{0.08}{2} )^2 + \frac{15000}{(1+\frac{0.08}{2})^2}[/tex]
= [tex]20906.15[/tex] ($)
