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# MGT201 GDB Solution fall 2013 required till 22 november 2013

Total Marks 5
Starting Date Wednesday, November 20, 2013
Closing Date Friday, November 22, 2013
Status Open
Question/Description

1. Share your ideas as soon as before 22nd November 2013

2. a) Present value of insurance policy

As the interest rate will increase present value of insurance policy will also increase:

suppose:

investment in insurance policy( present value) = 100 \$

Years to maintain investment = 10

Rate of interest is 9.0%

then by calculating its future value we find:-

Future value is 237\$

Now if our years and investment remain same but we increase our rate of interest then calculation will be ass below:-

investment in insurance policy( present value) = 100 \$

Years to maintain investment = 10

Rate of interest is 9.5%

then by calculating its future value we find:-

Future value is 248\$

So we can see as the interest rate increase the future value of investment(insurance policy) will also increase.

b) Future value of insurance policy

As the interest rate will increase future value of insurance policy will Decrease:

suppose:

Earning after ten years ( Future value) = 100 \$

Years to maintain investment = 10

Rate of interest is 9.0%

then by calculating its Present value we find:-

Present value is 42 \$

Now if our years and Earning remain same but we increase our rate of interest then calculation will be ass below:-

Earning after ten years ( Future value) = 100 \$

Years to maintain investment = 10

Rate of interest is 9.5%

then by calculating its future value we find:-

Future value is 40\$

So we can see as the interest rate increase the present value of invest policy will decrese