Question
1. Suppose the Dutch Water Authority wanted to raise money by selling perpetuities that pay $129 at the end of each year. If the appropriate
1. Suppose the Dutch Water Authority wanted to raise money by selling perpetuities that pay $129 at the end of each year. If the appropriate discount rate is 5.9%, how much is this cash flow stream worth? Round to the nearest dollar.
2. Suppose you make the following deposits into an account earning 1.9%: $13,000 today followed by $4,000 each year for the next 7 years (so the last cash flow is at year 7). How much will you have in the account after 12 years? Round to the nearest dollar.
5. If you borrow $24,000 from a bank for 8 years at an interest rate of 7.5%, how much will you owe in balloon payment at the end of the loan's term? This is a balloon loan with all payment due at the end. Round to the nearest dollar.
6.If you take out a balloon loan of $24,000 for 8 years at an interest rate of 7.5% and pay it all off at the end, how much interest will you have paid in total? Round to the nearest dollar.
7. Consider an amortized loan of $41,000 at an interest rate of 6.6% for 6 years. How much will your annual payments be? Round to the nearest dollar.
8.Consider an amortized loan of $45,000 at an interest rate of 7.6% for 9 years. What is the total interest owed? Round to the nearest dollar.
10. Suppose you are borrowing $44,000 at an interest rate of 2.9%. You will not make any payments for the first two years. Then, starting at the end of year 3, you will make 6 annual payments to repay the loan. How much will your annual payments be? Round to the nearest dollar.
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