Anyone god at Accountancy????

[poet123]

Eldest son is studying Busineess and is having real difficulty withthe Finance and Accounting module. He has brought some questions home for our help and whilst we are reasonably intelligent this is not our area of expertise!!!
We have got some answers to the questions below, just reaaly want confirmation that they are right.

Below are the questions which require answers!!

If S saves £20 per year for 20 years how much will herhave saved at the end of 20 years? Use an interest rate of 2% (hint work out the present value of the annuity then calculate its futir value by multyplying by (1+i )20)The 20 is written as to the power 20 in small figures at the top of the bracket.


Texas superstore once made he following offer;
'Buy one of our kitchens and we will give you your money back after.... 8 years'
If Texas can invest money at 5% what is the equivalent discount for this strange offer? ie this offer is the same as a discount of x% of the current purchase price (hint identify the cash flow- as ever)


A car dealer offers to sell you their cars at half price as long as you sell the car back to them for £1 after 5 years and agree to have the car serviced with them. T ypically in todays prices a £10,000 car would be worth £2,500 after 5 years. Servicing costs would produce profit of about £200 per year again at todays prices. Asuming an inteest rate of %6 what is he eqivalent selling price of a car with no such conditions? Are there any other problems with this offer for the car dealer?

Is anyone a financial whizz!!!!!!!![clap][clap]

[poet123]

Should read "Good" but if you are a God so much the better!!!!!!!!

[Nostromo]

<blockquote id="quote" class="ffs">quote:Originally posted by poet123
Should read "Good" but if you are a God so much the better!!!!!!!!
[/quote]

Maybe you have to be a God to be really good at accountancy?

[Rich-n-Ang]

I feel a new Forum section coming on..................

"Post your homework questions here"

[msnsmile2]

[Nostromo]

<blockquote id="quote" class="ffs">quote:Originally posted by poet123

A car dealer offers to sell you their cars at half price as long as you sell the car back to them for £1 after 5 years and agree to have the car serviced with them. T ypically in todays prices a £10,000 car would be worth £2,500 after 5 years. Servicing costs would produce profit of about £200 per year again at todays prices. Asuming an inteest rate of %6 what is he eqivalent selling price of a car with no such conditions? Are there any other problems with this offer for the car dealer?

Is anyone a financial whizz!!!!!!!![clap][clap]
[/quote]

First off, it depends on the make and the model, since there would be wide variations in depreciation. A well maintained Merc would probably worth 50% of its original value after 5 years whereas a high depriciating Rover or Citroen would be worth far less. Some models are also unreliable and the running & repair costs could more than wipe out any perceived bargain you make in this deal.

Finally, the dealer might have even been left with a really dodgy car from a normally reliable manufacturer and might have worked out this 'deal' to offload it on some unsuspecting victim. In my experience, car dealers are only slightly more honest than Estate Agents in their deals and that's not saying very much.

[emm]

<blockquote id="quote" class="ffs">quote:Originally posted by poet123

Below are the questions which require answers!!

If S saves £20 per year for 20 years how much will herhave saved at the end of 20 years? Use an interest rate of 2% (hint work out the present value of the annuity then calculate its futir value by multyplying by (1+i )20)The 20 is written as to the power 20 in small figures at the top of the bracket.


Texas superstore once made he following offer;
"Buy one of our kitchens and we will give you your money back after.... 8 years"
If Texas can invest money at 5% what is the equivalent discount for this strange offer? ie this offer is the same as a discount of x% of the current purchase price (hint identify the cash flow- as ever)


A car dealer offers to sell you their cars at half price as long as you sell the car back to them for £1 after 5 years and agree to have the car serviced with them. T ypically in todays prices a £10,000 car would be worth £2,500 after 5 years. Servicing costs would produce profit of about £200 per year again at todays prices. Asuming an inteest rate of %6 what is he eqivalent selling price of a car with no such conditions? Are there any other problems with this offer for the car dealer?

[/quote]

My brain is hurting already!

[Snapper]

Any good accountant would first of all ask you what you want the answer to be.

[msnwink][msnwink][msnwink]

[poet123]

I take it that no one is either God or Good at accountancy as no one has answered my pleas!!!!!!maybe its a condition of the forums????

[AccountantPhil]

I can give you a spreadsheet which calculates the first part. My maths is a bit out of date but the formula should work !
The second part works on the same principle (compound interest calculation) - again my maths is out of date but is saved by Excel!!)
Third part is a bit ambiguous and I could give you three or four answers (like all good Accountants)!
Phil