Question
1) How much more will you earn if you invest $1000 for 5 years at 8% compounded continuously instead of at 8% compounded quarterly? 2)
1) How much more will you earn if you invest $1000 for 5 years at 8% compounded continuously instead of at 8% compounded quarterly?
2) A company is currently evaluating a project which requires investments of 5000 now, and 2000 at the end of the year. The cash inflows from the project will be 7000 at the end of year 2 and 6000 and the end of year 3. If the discount rate is 16%, what is the net present value of the project?
3) A man buys a house for $200,000. He makes a $50,000 down payment and agrees to amortize the rest of the debt with quarterly payments over the next 10 years. If the interest on the debt is 12%, compounded quarterly, find
(i) Size of the quarterly payments,
(ii) Total amount of the payments, and
(iii) Total amount of interest paid.
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