Question
1. You just borrowed 17,500 from the bank to use in your business. The loan terms require you to pay the interest annually with the
1. You just borrowed 17,500 from the bank to use in your business. The loan terms require you to pay the interest annually with the entire principal due in four years. The interest rate is 9.5%. How much will you pay back in year four of the loan.
2. Your great aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive 2,500 on the first day of each year, starting immediately and continuing for fifty years. What is the value of this inheritance today if the applicable discount rate is 6.35%
3. Determine the difference between the present value of a 1000 twenty year annuity earning 8% interest compounded annually verse a 1000 twenty year growing annuity earning 8% interest compounded annually and having a 2% annuity growth rate
4. Westover ridge offers a 9% coupon bond with semiannual payments and a yield to maturity of 11.68%. The bonds mature in 16 years. What is the market price per bond in the face value is $1000.
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