Question
1. a. Suppose you signed a contract for a special assignment over the next 13 years. You will be paid $3,693 at the end of
1.
a. Suppose you signed a contract for a special assignment over the next 13 years. You will be paid $3,693 at the end of each year. If your required rate of return is 19%, what is the contract worth today?
b. You need a loan to purchase new equipment. The loan will be paid off over 12 years with payments made at the end of every quarter. If the stated annual rate is 05.00% and quarterly payments are $256, what is the loan amount?
c. What is the most that you would pay for an investment that promises to pay $7,455 a year forever with the first payment starting one year from now? Assume that your required rate of return for the investment is 07.00%.
d. A loan has a stated annual rate of 04.00%. If the loan payments are made monthly and interest is compounded monthly, what is the effective annual rate of interest?
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Financial Management Concepts and Applications
Authors: Stephen Foerster
1st edition
013293664X, 978-0132936644
