Question
1. Solve the following questions. a) Suppose Rosie's mum is considering purchasing a financial asset that promises to pay $2,500 per year for six years,
1. Solve the following questions.
a) Suppose Rosie's mum is considering purchasing a financial asset that promises to pay $2,500 per year for six years, with the first payment one year from now. The required return is 11% per year. How much should Rosie's mum pay for this asset?
b) For the year 2000, Coca-Cola Company, recorded net sales of $7,368 million. For 2010, Coca-Cola recorded net sales of $11,245 million. Over the ten-year period from the end of fiscal year 2000 to the end of 2010, What is the Coca-Cola's growth rate?
c) Leo is planning to purchase a home for $550,000 in Charleston, SC. He intends making a down payment of $50,000 and borrowing the remaining amount with a 30-year fixed rate mortgage with monthly payments. The first payment is due a month from now. The current mortgage rates are quoted at 4% per year with a monthly compounding. How much would Leo's monthly mortgage payment be?
d) Clementine is the lucky winner of the Georgia lottery of $50 million after taxes. He invests his winnings in a 10-year certificate of deposit (CD) at the Lawrenceville Credit Union. The CD promises to pay 6% per year, compounded quarterly. The credit union allows investors to reinvest the interest at that rate for the duration of the CD. How much will Clementine have at the end of ten years if his money remains invested at 6% for ten years with no withdrawals?
e) Caillou is interested in determining how long it will take an investment of $20,000 to double. The current interest rate is an interest rate of 10%?
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