Financial Management (MGT201)
Assignment # 01 Marks: 15
“Time Value of Money”
ABC Corporation, a maker of electronics equipments, is considering selling the
rights to market its products to a well‐known advertising firm.
The proposed deal calls for annual year end payments of Rs.15,000 in years 1
through 7 and payments of Rs.30,000 and Rs.25,000 at the end of 8th and 9th year
respectively . A final payment of Rs. 10,000 would be due at the end of year 10.
1. If ABC Corporation applies a required rate of return of 12% to them, what is the
present value of this series of payments?
2. A second company has offered ABC Corporation a payment of Rs.30,000 now
and another final payment of Rs.80,000 at the end of year 3 for the rights to
market the products. Which offer should ABC Corporation accept?
(Show complete calculations and provide all formulas as they carry marks)
Important Tips
This Assignment can be best attempted from the knowledge acquired after
watching video lecture# 1 to lecture # 10 and reading handouts as well as
recommended text book.
Video lectures can be downloaded for free from www.OnlineVUlectures.blogspot.com
Schedule
Opening Date and Time October 27, 2010 At 12:01 A.M. (Mid-Night)
Closing Date and Time November 01, 2010 At 11:59 P.M. (Mid-Night)
Topic/Area for Discussion
Note: Only in the case of Assignment, 24 Hrs extra / grace period after the above
mentioned due date is usually available to overcome uploading difficulties which
may be faced by the students on last date. This extra time should only be used to
meet the emergencies and above mentioned due dates should always be treated
as final to avoid any inconvenience.
Important Instructions:
Please read the following instructions carefully before attempting the assignment solution.
Deadline:
• Make sure that you upload the solution file before the due date. No assignment will be
accepted through e‐mail once the solution has been uploaded by the instructor.
Formatting guidelines:
• Use the font style “Times New Roman” and font size “12”.
• It is advised to compose your document in MS‐Word 2003.
• Use black and blue font colors only.
Solution guidelines:
• Every student will work individually and has to write in the form of an analytical
assignment.
• Give the answer according to question, there will be negative marking for irrelevant
material.
• For acquiring the relevant knowledge, don’t rely only on handouts but watch the video
lectures and use other reference books also.
• Marks will be deducted if complete calculations and formulas are not provided.
Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0) if:
• It has been submitted after due date
• The file you have uploaded, does not open or is corrupt
• It is in any format other than .doc (MS. Word)
• It is cheated or copied from other students, internet, books, journals etc…
Best of Luck!!!!!!!
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