6 Questions
What is the amount to be invested to receive Rs. 2,00,000 per annum in perpetuity at an interest rate of 8%?
Rs. 25,00,000
What is the amount to be invested to receive Rs. 4,00,000 per annum in perpetuity at an interest rate of 5%, considering a growth rate of 3% per year?
Rs. 50,00,000
What are the interest rates for the two investment scenarios mentioned?
8% and 5%
What is the current ratio?
The current ratio is calculated by dividing current assets by current liabilities. Current assets include cash, bank, debtors, and inventory, which total to 1,100,000. Current liabilities include trade payables and bank OD, which total to 200,000. Therefore, the current ratio is $ rac{1,100,000}{200,000} = 5.5$.
What is the Acid Test Ratio?
The Acid Test Ratio, also known as the quick ratio, is calculated by dividing quick assets by current liabilities. Quick assets include cash, bank, and debtors, which total to 700,000. Current liabilities include trade payables and bank OD, which total to 200,000. Therefore, the Acid Test Ratio is $ rac{700,000}{200,000} = 3.5$.
What is the difference between current ratio and Acid Test Ratio?
The main difference between the current ratio and Acid Test Ratio is that the current ratio includes inventory in the calculation of current assets, while the Acid Test Ratio only includes quick assets (cash, bank, and debtors). The inclusion of inventory in the current ratio provides a broader measure of liquidity, while the Acid Test Ratio provides a more conservative measure by excluding inventory.
Calculating Investment Amounts Quiz: Determine the amount needed to receive a fixed annual income in perpetuity at different interest rates and growth rates.
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