Question: Old MathJax webview Old MathJax webview Old MathJax webview Explain All parts accounting Case 1: Mr. Abdullah has invested Rs 8.5 million in property which

Old MathJax webview
Old MathJax webview
Old MathJax webview

Explain All parts accounting

Case 1: Mr. Abdullah has invested Rs 8.5 million in property which he is determined to hold for

minimum period of 2 years. At the end of 2nd year, the market value of his property is expected

to rise to the price of Rs. 11 million.

Answer the following questions with the help calculation:

1. Ifhe considers a simple growth rate on his investment, what rate he is expected to get?

2. If he considers a compounding growth rate on investment, what rate he is expected to

get?

3. If the inflation in country is expected to be 9% at the end of 2nd year, what will be his real

return (both in percentage and amount)

4. If he is targeting to get a real return rate of 7% of this property, will he be interested to

invest? (Support your decision with logical arguments and calculation)

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