Value in use – (RM40K x 5years ordinary annuity at 7%) + (RM200k x 5 years at 7%)
=(RM 400K X 4.1 ) + (RM20K X 0.713)
= RM 178,260
HOW TO GET THE ANSWER
To calculate the value in use, you need to find the present value of the annuity payments for both the RM40,000 and RM200,000 over a period of 5 years at a 7% interest rate.
For the RM40,000 annuity, you can use the formula for the value of an ordinary annuity: PV = PMT x [1 - (1 + r)^(-n)] / r, where PV is the present value, PMT is the annuity payment, r is the interest rate, and n is the number of periods. Plugging in the values, the calculation would be:
PV = RM40,000 x [1 - (1 + 0.07)^(-5)] / 0.07
= RM40,000 x [1 - (1.07)^(-5)] / 0.07
= RM40,000 x [1 - 0.6139] / 0.07
= RM40,000 x 0.3861 / 0.07
= RM22,207.14
For the RM200,000 annuity, you can use the same formula:
PV = RM200,000 x [1 - (1 + 0.07)^(-5)] / 0.07
= RM200,000 x [1 - (1.07)^(-5)] / 0.07
= RM200,000 x [1 - 0.6139] / 0.07
= RM200,000 x 0.3861 / 0.07
= RM1,110,357.14
Finally, add the present values of the two annuities together to get the total value in use:
Value in use = RM22,207.14 + RM1,110,357.14
= RM1,132,564.28
Therefore, the correct answer should be RM1,132,564.28, not RM178,260.