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Discover it® chrome card for students is a popular credit card among college students. It has an APR of 22.99% (compounded daily) for unpaid balances after the grace period. What is this credit card's effective annual interest rate (EAR)? 4 Answer: After spending the first 15 years of his professional career with the Boston Celtics, veteran basketball player Paul Pierce signed a 3-year contract with the Los Angeles Clippers in 2015. For simplicity, assume that Pierce would receive the following after-tax cash flows: At Year 0: a signing bonus of $1 million; At Year 1: $2.5 million; < At Year 2: $1.5 million; ● At Year 3: $1 million. Pierce puts all his money into a savings account at an interest rate of 6% (APR, compounded monthly), and Pierce decides to discount all future cash flows using this rate. Imagine that Pierce wants a slightly different contract which has exactly the same present value, a zero signing bonus and equal monthly payments at the end of each month. What is the amount of each monthly payment (ignore all taxes and bonuses)? I ● ● ● Answer: Discover it® chrome card for students is a popular credit card among college students. It has an APR of 22.99% (compounded daily) for unpaid balances after the grace period. What is this credit card's effective annual interest rate (EAR)? 4 Answer: After spending the first 15 years of his professional career with the Boston Celtics, veteran basketball player Paul Pierce signed a 3-year contract with the Los Angeles Clippers in 2015. For simplicity, assume that Pierce would receive the following after-tax cash flows: At Year 0: a signing bonus of $1 million; At Year 1: $2.5 million; < At Year 2: $1.5 million; ● At Year 3: $1 million. Pierce puts all his money into a savings account at an interest rate of 6% (APR, compounded monthly), and Pierce decides to discount all future cash flows using this rate. Imagine that Pierce wants a slightly different contract which has exactly the same present value, a zero signing bonus and equal monthly payments at the end of each month. What is the amount of each monthly payment (ignore all taxes and bonuses)? I ● ● ● Answer:
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Related Book For
Financial Algebra advanced algebra with financial applications
ISBN: 978-0538449670
1st edition
Authors: Robert K. Gerver
Posted Date:
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