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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.

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Solution

TRADE DISCOUNT
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
P.V = 177595.62 answer

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
F.V = 3824800 answer

[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]
F.V = 1138094 answer

IDEA A:

I think ali should buy a company instead of initiating a new company because he does not have any experience of developing his own business and also he possesses a small amount of money and it is quite hard to initiate a business with small investment....

IDEA B...

As this business is concerned to the traveling and outing.... ali has experience of outing and traveling this is one of the biggest edge for him.... also this is the thing that made him convinced to do this business although he does not have any experience.....
another thing in this business is ....he can bring new trends and innovation to this business because he has a great experience and interest regarding this field