## MGT602 Entrepreneurship Assignment No. 1 Idea Solution Fall October 2010

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MGT602 Assignment#1 Fall 2010 Idea Solution.

Question 1:
If the basic salary of an employee is Rs. 37000 and allowances are Rs. 22,000.
What is the taxable income of employee?

Solution:
Basic salary = 37000
Allowances = 22,000
As we now that allowance is always 50% of the basic salary
So here basic salary is 37000 * 50 / 100 = 18500
And 22000 - 18500 = 3500
Hence 3500 Rs. of allowances are taxable.
Total taxable income = 37,000 + 3500 = 40,500 Rs

Question 2:
If the salary and allowances of an employee is as follows:
Basic salary = Rs. 12,000
House Rent Allowance = 45%
Conveyance Allowance = 5%
Utilities Allowance = 7%

Group Insurance/Medical = 0%
Misc. Social Charges = 5.8%
There are 12 casual, 24 earned and no sick leaves per year where as normal working days er month are 26. Find the Gross remuneration of the employee.

Solution:-
Basic salary=12000
House rent allowance = 45% = 45/100 = 0.45 = 0.45*12000 = 5400
Conveyance allowances = 5% = 5/100 = 0.05 = 0.05*12000 = 600
Utility allowances = 7% = 7/100 = 0.07 = 0.07*12000 = 840
Group insurance/Medical = 0% = 0
Total Allowances = 5400 + 600 + 840 = 6840
Misc. Social Charges = 5.8/100 * 18840 = 1092.72

Gross salary =12000 + 6840 = 18840
Cost of casual leave per year=12/(26*12)*18840*12 = 8695.38
Cost of earned leave per year=24/(26*12)*18840*12 = 17390.76

Sick leave = 0
Total cost of leaves = 26086.14/ 12 = 2173.845

Now Find Gross Remuneration By Your Self

Question 3:
A trade discount series of 20, 10, and 5 is offered on an item which has a list price of Rs.9100. Find the amount of discount and the net price.

Solution

Net Price = L* (1 - D)*(1 - D)*(1 - D)
= 9100 *(1- 0.2)*(1-0.1)*(1-0.05)
=9100 *(0.8)*(0.9)*(0.95)
=9100*0.684
=6224.4
DISCOUNT
Net price = 9100 - 6224.4
= 2875.6

Question 4:
If your goal is to have an amount of 325000 in seven years and you can get interest rate of 9% per annum compounded annually. How much would you need to invest now?

Solution:

Given
n = 7
i = 9 %
F. V = 325000
As we know that
F.V = P.V (1 + i ) ^ n
325000 = P.V (1 + 0.09)^ 7
325000 = P.V ( 1.83)
P. V = 325000/1.83

Question 5:
If you start saving Rs. 28,000 at the end of each six month, and you get interest rate 11% per annum) compounded semi-annually, how much will you have accumulated at the end of 20 years?

Solution:

Given
n = 20 x 2 = 40
i = 11% = 0.11/2 =0.055
P. V = 28000
As we know that
F.V = P.V (1 + i ) ^ n -1 /i
F.V = 28000 (1 + 0.055)^40 - 1 / 0.055
F.V = 28000 ( 136.60)
F. V = 3824800

[COLOR="rgb(244, 164, 96)"]Question 6:
The price of an item decreased from Rs. 856 to Rs.752. What is the percentage change in price of item?[/COLOR]

Solution

Percentage change in price of item
856 - 752 = 104
Percentage change =104/856 *100 = 12.149%
Question # 7
Suppose you can afford to pay 9,000 per month on a loan. How much can you borrow if he loan is for a period of 15 years and the interest rate is 5% per annum compounded monthly?

Solution

Given
n = 15
m =12
i = 5%
P .V = 9000
As we know that
F.V = 9000 ([1 - 1/(1+i/m)^n*m]/i/m
F.V = 9000([1 -1/(1+0.05/12)^15*12]/0.05/12
F.V = 9000([1 - 1/(1+0.0041667)^180]/0.0041667
F.V = 9000([1 - 1/(1+0.0041667)^180]/0.0041667
F.V = 9000([1 - 1/(1.0041667)^180]/0.0041667
F.V = 9000([1 - 1/2.1137]/0.0041667
F.V = 9000([1 - 0.4731]/0.0041667
F.V = 9000[0.5269]/0.0041667
F.V = 9000[126.4549]