Ahmed purchased car for AED 110,500 and then he rents it out for 5 years at...
Ahmed purchased car for AED 110,500 and then he rents it out for
5 years at AED 28,000 per year. If the annual maintenance cost for
the car is AED 2,000 per year and the salvage value after 5 years
is AED 70,000. Calculate the present worth value for this car
investment at 15% interest rate.
|
11,461 |
||
|
-12,023 |
||
|
20,876 |
||
|
-23,804 |
Homework Answers
Option (1).
Annual net income = Rental income - Maintenance cost = 28,000 - 2,000 = 26,000
Present worth of car investment (AED) = - 110,500 + 26,000 x P/A(15%, 5) + 70,000 x P/F(15%, 5)
= - 110,500 + 26,000 x 3.3522** + 70,000 x 0.4972**
= - 110,500 + 87,157 + 34,804
= 11,461
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